AgriFood-WP 2018:2

Splitting the Price Effect of Private Labels – The Case of a Swedish Metropolitan Area

Both theoretical and empirical literature provides mixed results on the impact on retail prices from the introduction of private labels, also known as store brands. In this paper we further explore the price effect on leading national brands by using a unique data set covering prices of a variety of food products in a major Swedish metropolitan area. Using information on if a retail chain markets a private label in a specified product category and whether an individual store chooses to provide the private label we are able to estimate the total price effect on national brands from private labels and to what extent it is due to any instore price effect.

We find scarce evidence that the price on market leaders depends on whether a store chooses to market a private label. However, the results suggest that private labels lower consumer prices although the magnitude significantly depends on which category studied.

For a brief version in Swedish, see AgriFood Policy Brief 2018:3.