Why Do Retailers Advertise Store Brands Differently Across Product Categories?

51 Pages Posted: 22 Mar 2019

See all articles by Rachel Griffith

Rachel Griffith

Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)

Michal Krol

University of Manchester

Kate Smith

Institute for Fiscal Studies (IFS); University College London

Date Written: September 2018

Abstract

We provide new evidence on retailers’ pricing and advertising of store brands in the U.K. grocery markets. We analyse a simple Hotelling model in which retailers and manufacturers endogenously advertise their respective brands; we account for the impact of advertising on retailer–manufacturer bargaining and downstream competition. The model predicts that retailers advertise their store brands less when advertising is more rivalrous. We present empirical evidence consistent with this prediction. According to our model, aggregate consumer surplus can be higher with store brands than when they are absent from the market.

Suggested Citation

Griffith, Rachel and Krol, Michal and Smith, Kate, Why Do Retailers Advertise Store Brands Differently Across Product Categories? (September 2018). The Journal of Industrial Economics, Vol. 66, Issue 3, pp. 519-569, 2018. Available at SSRN: https://ssrn.com/abstract=3358535 or http://dx.doi.org/10.1111/joie.12178

Rachel Griffith (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London WC1E 7AE
United Kingdom
+44 20 7291 4800 (Phone)
+44 20 7323 4780 (Fax)

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://www.ifs.org.uk/people/profile?id=37

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Michal Krol

University of Manchester

Kate Smith

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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