Do private labels increase retailer bargaining power?

Meza, Sergio; Sudhir, K.

doi:10.1007/s11129-010-9085-9

Cited by 125 publications

(70 citation statements)

References 36 publications

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“…Grennan (2013) studies negotiated prices set between hospitals and suppliers of medical devices. In the marketing literature, Draganska and Villas-Boas (2011) and Meza and Sudhir (2010) estimate the relative bargaining power of manufacturers and retailers in the markets for coffee and breakfast cereals, respectively. Sieg (2000) estimates a bargaining model with asymmetric information of malpractice disputes and Keniston (2011) estimates passengers and auto-rickshaw drivers bargaining in India.…”

Section: Modelmentioning

confidence: 99%

Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

Gowrisankaran

Nevo

Town

2015

American Economic Review

294

140

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In healthcare and other bilateral oligopoly markets, prices are often negotiated by the contracting parties. Many hospitals have merged in recent years in part to gain bargaining leverage with managed care organizations (MCOs), leading to several antitrust trials. We specify and estimate a bargaining model of competition between hospitals and MCOs using claims and discharge data from Northern Virginia. We find that MCO bargaining restrains hospital prices significantly relative to standard insurance. Increasing patient coinsurance tenfold would reduce prices by 16%. A proposed hospital acquisition that was challenged by the Federal Trade Commission would have significantly raised hospital prices.The views expressed here are the authors alone and do not necessarily reflect the views of the Federal Trade Commission or any Commissioner.

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Section: Modelmentioning

confidence: 99%

Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

Gowrisankaran

Nevo

Town

2015

American Economic Review

294

140

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“…For example, Chintagunta et al (2002) investigate changes in preferences for national brands and price elasticities due to the introduction of a store brand. The introduction of a store brand has been shown to influence not only brand choice but also retailers' bargaining power (Geyskens et al 2010;Meza and Sudhir 2010;Narasimhan and Wilcox 1998;Pauwels and Srinivasan 2004). Furthermore, Gielens (2011) find that new products offering substantially new, intrinsic benefits are relatively more effective than other new product introductions and even more so when fighting private labels rather than national brands.…”

Section: Recent Literature On Store Brandsmentioning

confidence: 99%

A cross-category and cross-country analysis of umbrella branding for national and store brands

Erdem

Chang

2011

J. of the Acad. Mark. Sci.

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The large penetration of store brands has been accelerated by a substantial increase of their availability across various categories. Although store brands have generated tremendous interest in the literature, little work has been done on umbrella branding strategies for store brands. We extend the previous work of Erdem (1998) andErdem et al. (2004) by studying the learning spillover effects of umbrella brands across categories for both national and store brands. We apply the Multivariate Multinomial Probit Model of crosscategory learning across five product categories to study differences across store versus national umbrella brands in three countries (i.e., the United States, the United Kingdom, and Spain). Our results indicate that cross-category learning effects exist between different product categories in consumer packaged goods for both store brands and national umbrella brands, although some of the categories in which correlated learning happens differ between the two. The degree of crosscategory learning also varies across categories.Keywords Brand choice . Store brands . Umbrella branding A substantial increase in the availability of store brands across various categories and the expectation that recessionary trends often involve a shift toward store brands have renewed scholarly interest in understanding consumer behavior related to store brands. Despite the breadth of the literature on store brands (e.g., Batra and Sinha 2000;Dhar and Hoch 1997;Sethuraman 1992), little research has been done on umbrella branding in the context of store brands. Most previous research has concentrated on the umbrella branding of national brands rather than store brands. For example, Erdem (1998) demonstrated how consumers may learn about national umbrella brands through their user experiences across categories. Erdem et al. (2004) further estimated a learning model to explain differential market shares for store brands in the United States versus those in Europe; however, they did not explore any cross-category learning effects.The purpose of this work is to extend previous work by Erdem (1998) andErdem et al. (2004) to study the learning spillover effects of umbrella brands across multiple categories for both national and store brands. For this purpose, we apply the Multivariate Multinomial Probit Model of crosscategory learning, which allows for simultaneous and interdependent choice of different brands across categories. To the best of our knowledge, our model is the first Multivariate Multinomial Probit Model (MVMNP) with learning (previous learning models assumed the multinomial logit (MNL)). In addition, we repeat the analysis in three countries: the United States, the United Kingdom, and Spain. Our results indicate that cross-category learning effects exist between several pairs of categories for both store and national umbrella brands, although some of the categories in which correlated learning happens differ between store and national umbrella brands. The degree of cross-category learning also varies across p...

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“…In-depth case studies in strategic management have pointed to features of the "pricing process" as important firm capabilities (Dutta, Zbaracki, and Bergen 2003). A few recent studies in marketing (Draganska, Klapper, and Villas-Boas 2009;Meza and Sudhir 2010;Scott-Morton, Silva-Rosso, and Zettelmeyer 2011) and strategy (Bennett 2013) have begun to match data on negotiated prices with firm characteristics such as organizational structure. This paper contributes to these lines of research by using a rare multi-dimensional panel data set on prices and quantities for many buyer-supplier pairs in a business-to-business market over time, developing a modeling framework to separately identify bargaining power and bargaining ability, and providing new evidence on the degree of firm-specificity of bargaining ability and how it changes over time.…”

mentioning

confidence: 99%

Bargaining Ability and Competitive Advantage: Empirical Evidence from Medical Devices

Grennan

2012

SSRN Journal

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In markets where buyers and suppliers negotiate, supplier costs, buyer willingness to pay, and competition determine only a range of potential prices, leaving the final price dependent on other factors (e.g., negotiating skill), which I call bargaining ability. I use a model of buyer demand and buyer-supplier bargaining, combined with detailed data on prices and quantities at the buyer-supplier relationship level, to estimate firm-bargaining abilities in the context of the coronary stent industry where different hospitals (buyers) pay different prices for the exact same product from the same supplier. I estimate that (1) variation in bargaining abilities explains 79% of this price variation, (2) bargaining ability has a large firm-specific component, and (3) AbstractIn markets where buyers and suppliers negotiate, supplier costs, buyer willingness-topay, and competition determine only a range of potential prices, leaving the final price dependent on other factors (e.g. negotiating skill), which I call bargaining ability. I use a model of buyer demand and buyer-supplier bargaining, combined with detailed data on prices and quantities at the buyer-supplier relationship level, to estimate firm bargaining abilities in the context of the coronary stent industry where different hospitals (buyers) pay different prices for the exact same product from the same supplier. I estimate that: (1) variation in bargaining abilities explains 79% of this price variation, (2) bargaining ability has a large firm-specific component, and (3) changes in the distribution of bargaining abilities over time suggest learning as an important channel influencing bargaining ability. * Data for this research was provided by Millennium Research Group (www.mrg.net). Special thanks for the guidance and encouragement throughout the many phases of this research project go to my dissertation committee: John Asker, Adam Brandenburger, Allan Collard-Wexler, Michael Katz, and Bernie Yeung. I also benefited from discussions with Heski Bar-Isaac, Luís Cabral, Catherine de Fontenay, JP Eggers, Robin Lee, PT Leger, Hong Luo, Gabriel Natividad, Joanne Oxley, Ariel Pakes, Mike Ryall, Rob Salomon, Gus Stuart, Ali Yurukoglu, and seminar audiences at Analysis Group, Arizona, Columbia, Georgia, LSE, NYU, Toronto, Wharton, and Yale. Andy Cron, John Brumleve, Mark Bly, Rob Tumarkin, and many others have been helpful in teaching me about medical device manufacturing and sales. Physicians and administrators at NYU Medical Center and CGH, Sterling, IL were especially generous with their time and knowledge regarding hospital purchasing and the inner workings of a cardiac catheterization lab. Some industry background research was conducted while attending the Transcatheter Cardiovascular Therapeutics 2008 conference, which was made possible by the Cardiovascular Research Foundation.

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Do private labels increase retailer bargaining power?

Cited by 125 publications

References 36 publications

Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

A cross-category and cross-country analysis of umbrella branding for national and store brands

Bargaining Ability and Competitive Advantage: Empirical Evidence from Medical Devices

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