Brand Name and Private Label Price Setting by a Monopoly Store

Posted by D. Daniel Sokol

Jeffrey M. Perloff (Berkeley), Jeffrey T. LaFrance (Monash University) and Hayley H. Chouinard (Washington State University) discuss Brand Name and Private Label Price Setting by a Monopoly Store

ABSTRACT: A monopoly that sells to brand-name loyal customers and to price-sensitive customers must decide whether to carry both name-brand and a private-label products and how much to charge. The monopoly may charge either more or less for the brand name if it carries a private label, and the price differential between the products is sensitive to cost and taste parameters.