Optimal production channel for private labels: Too much or too little innovation?

Claire Chambolle (), Clémence Christin () and Guy Meunier

Economics Working Paper Archive (University of Rennes & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS

Abstract: We analyze the impact of the private label production channel on innovation. A retailer may either choose a competitive fringe or rely on a brand manufacturer to produce its private label. The trade-o between the two channels is a choice between too much or too little innovation, i.e. quality investment, on the private label. On the one hand, when choosing the competitive fringe, the retailer over-invests to increase its buyer power. On the other hand, when the brand manufacturer is selected, a hold-up e ect leads to under-investment. In addition, selecting the brand manufacturer may create economies of scale that spur innovation.

Keywords: Private label; vertical relations; buyer power; innovation (search for similar items in EconPapers)
JEL-codes: L14 L15 L42 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-com and nep-ino
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Related works:
Journal Article: Optimal Production Channel for Private Labels: Too Much or Too Little Innovation? (2015)
Working Paper: Optimal Production Channel for Private Labels: Too Much or Too Little Innovation? (2015)
Working Paper: Optimal production channel for private labels: Too much or too little innovation? (2014)
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