DOES PRIVATE LABEL OWNERSHIP AND PRICING STRUCTURE MATTER?

This article provides an analysis of the two-stage game between manufacturers and retailers. Response functions showing how prices are set are derived for the case of a manufacturer producing one and multiple goods and for a retailer selling multiple goods. The functions are expressed in terms of elasticities, budget shares, and variable production costs. An application using ready-to-eat cereals is conducted to investigate the pricing structure and ownership of private label cereals.