Market Power, Brand Characteristics and Demand for Retail Grocery Products
17 Pages Posted: 14 Mar 2006 Last revised: 10 Apr 2011
Date Written: February 1, 2006
This paper examines the effects of market power and product differentiation on demand for grocery products in Australia over the period 2002 to 2005. We construct a model of the relationship between demand, market power and brand characteristics and then estimate the model using monthly data on price, quantity and volume sold for a bundle of 92 brands in 12 product categories from major supermarket stores across Australia. We also use data on the characteristics of each brand such as whether the product is environment-friendly, is a "private label", or is made from recyclable materials. Our results suggest that firms are able to affect their demand curves through both product differentiation strategies and through market power.
Keywords: Market power, Product differentiation, Trade marks, Brands, Demand
JEL Classification: L13, L15, L8
Suggested Citation: Suggested Citation