What's in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names
Zohra Mechemache (),
Jianyu Yu and
No 17-866, TSE Working Papers from Toulouse School of Economics (TSE)
Collective labels are widespread in food markets, either separated or nested with private brands; the latter known as nested names. We propose a model to explain the rationale of nested names, with collective labels being effective in reaching unaware consumers while individual brands help firms to reach aware consumers. We also incorporate the decision-making within the group of producers joining collective labels, taking into account their heterogeneity in providing quality. We show that nested names emerge when consumers become more aware of information on the label's quality and when producers become more heterogeneous. Welfare may decrease, however, when the group switches to nested names, because nested names may lead to lower quality incentives for the majority producers. The results also provide insights into the historical and recent trends in food industries, such as within-label differentiation and label fragmentation, and their welfare implications.
Keywords: nested names; individual brands; collective labels; consumers' awareness; producer heterogeneity; quality provision (search for similar items in EconPapers)
JEL-codes: D71 D83 L15 L66 Q13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cdm and nep-com
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Published in American Journal of Agricultural Economics, vol. 100, n°1, janvier 2018, p. 286-310.
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Working Paper: What’s in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:32213
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