MARKET-STRUCTURE DETERMINANTS OF NATIONAL BRAND-PRIVATE LABEL PRICE DIFFERENCES OF MANUFACTURED FOOD PRODUCTS

This paper estimates the relationships between market structure and the Lerner index of monopoly constructed from price data on processed food products sold through grocery stores. A theoretical model of a differentiated oligopoly specifies two determinants of price-cost margins: the Herfindahl-Hirschman index of seller concentration adjusted for the elasticity of demand and the industry advertising-to-sales ratio. The results indicate that the three principal determinants of price-cost margin variation, in order of their impacts, are: advertising intensity, elasticity of demand, and concentration. Previous structure-performance studies that did not incorporate the elasticity of demand were probably misspecified.


Issue Date:
1991-10
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/116099
Total Pages:
28
Series Statement:
Working Paper
23




 Record created 2017-04-01, last modified 2017-08-26

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