Do consumers benefit from private label development?

In the European food sector private labels represent a relevant and increasing share of total sales. Thus, national brands need to adapt their marketing strategies to deal with this growing competition. Focusing on price strategies, recent theoretical papers conclude that private label development should cause a decrease in the price of national brands, while some empirical studies do not support this prediction. The aim of this study is to explore this empirical relationship for the Italian food retail sector, which is of special research interest, since it has undergone a dramatic change in the last 10 years. Using retail sales data, we build time series of market shares of prices of national brands and private labels for different dairy products and we study how prices of national brands react to private label growth. We find that, for most products, the negative impact of private label development on national brand prices is confirmed, and this may be mainly due to the difficulties in implementing product differentiation strategies by national brand manufacturers. A relevant exception is the hard discount channel, probably because its success is attracting an increasing number of national brands.private label, pricing, retail sector, dairy products., Consumer/Household Economics, Marketing,

Modelling Agricultural Commodity Markets under Imperfect Competition

In this paper, we develop a model that explains the exporters’ behaviour in international commodity markets considering explicitly the case of an imperfectly competitive structure of these markets. More specifically, drawing from the imperfect competition and trade literature, we derive price transmission equations between producer and consumer prices and between producer and export prices that can be included in large commodity models in order to verify how results of these models change assuming the imperfect competition hypothesis. The results obtained carrying out a simple simulation exercise, with two competing exporting countries and one importing region, show the relevance of assuming imperfect competition in commodity markets.Imperfect Competition, State Trading Enterprises, Policy simulation, Cereal markets, International Relations/Trade, Marketing, Q12, Q17, Q18,

Minimum Distance Requirements and Liability: Implications for Co-Existence

The co-existence of conventional and transgenic products in the food chain introduces new elements in the evaluation of the profitability of transgenic crops and, consequently, on the farmer’s adoption decision. In particular, one emerging problem farmers are facing in Europe is related to the legal liability of transgenic crop cultivation. In Europe, a mixture of ex-ante regulations and ex-post liability rules governing transgenic crops emerges. One of the predominant ex-ante regulations discussed at the EU-level is a minimum distance requirement to neighbouring fields in order to avoid cross-pollination. The ex-post liability rules differ. They depend on the legal frameworks of individual members of the EU. The current interpretation of, for example, Italian and German law does not exclude ex-post liability for farmers planting transgenic crops in the case of cross-pollination. In this paper, we analyze the value of planting transgenic crops when farmers face ex-ante regulatory and ex-post liability costs under irreversibility and uncertainty. The regulatory instrument analyzed is the minimum distance to neighbouring fields. First results indicate that under irreversibility and uncertainty the value of cultivating transgenic crops presents a trade-off between ex-ante regulatory and ex-post liability costs with respect to farm size. From this, it is not possible to conclude a priori the net effect on the size of the adopting farms, if, ceteris paribus, a minimum distance regulation is adopted within the EU and farmers can be held liable ex-post.Coexistence, ex-ante regulation, ex-post liability, real option, uncertainty

Consumer's Attitude Towards Labeled and Unlabeled GM Food Products in Italy

Based on survey data collected on a sample of 500 Italian consumers, this paper evaluates the consumer's attitude towards foods obtained from the application of biotechnologies and foods labeled as "GM free". Results from the application of probit models shows that the probability to purchase GM products is lower for individuals more adverse to risk, older, with higher education and less confident in institutional guarantees. Willingness to Pay for GM free products is positively related to information, risk aversion, age, trust in institutional environment, negatively to the degree of agreement with the application of biotechnologies.Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies,

A Partial Equilibrium Model of the Beef and Dairy Sector in Italy Under Imperfect Competition

In this paper we present a partial equilibrium model for the bovine sector (beef and dairy) in Italy, which can be used for simulation and forecasting. The structure of the model follows the vertical chain of the beef and dairy sector, allowing trade of both agricultural raw materials and final products. Since the processing and retailing stage is characterised by an imperfectly competitive structure, the model accounts for market power in modelling the price transmission mechanism. This provides further insights on the vertical transmission of shocks, both at the final level (i.e. the BSE crisis) and at the farm level (i.e. agricultural policy reform).simulation models, policy analysis, imperfect competition, beef, dairy, Livestock Production/Industries,

DEMAND SYSTEM CHOICE BASED ON TESTING THE ENGEL CURVE SPECIFICATION

It is common to use a demand systems approach in estimating the key parameters from household consumption data. In conducting these studies the researcher is faced with selecting a functional form. In turn, each functional form implies a particular shape for the Engel curves. This analysis highlights the importance of testing the shape of Engel curves, especially if the researcher is interested in elasticity estimates well away from the sample mean. Using consumption data for selected households in Italy it is shown that many popular functional forms are rejected by the data.Demand and Price Analysis,

The impact of labels on the competitiveness of the European food label supply chain

The report studies the impact of private labels on the competitiveness of the European food processing industry and investigates whether a system of producer indication may improve the functioning of the food supply chain. The impact is studied using economic theory and empirical and legal analysis. The study is completed with an impact assessment

Modelling Agricultural Commodity Markets under Imperfect Competition

In this paper, we develop a model that explains the exporters’ behaviour in international commodity markets considering explicitly the case of an imperfectly competitive structure of these markets. More specifically, drawing from the imperfect competition and trade literature, we derive price transmission equations between producer and consumer prices and between producer and export prices that can be included in large commodity models in order to verify how results of these models change assuming the imperfect competition hypothesis. The results obtained carrying out a simple simulation exercise, with two competing exporting countries and one importing region, show the relevance of assuming imperfect competition in commodity markets