Price Premia to Name Brands: An Empirical Analysis

Abstract

This paper examines the factors affecting prices in the North America banana market. There are substantial price differences between brand-name and 'generic' companies, and among branded companies. Key questions are what causes these price differences, how are they related to the brand names of leading companies, and what role does quality play. Investigation reveals numerous potential differences, including important quality dimensions such as method of shipment and sourcing, as well as differences in brand-name recognition. The econometric analysis shows that objective quality characteristics explain the bulk of price variation and that subjective factors like brand names explain little price variation. Copyright 1996 by Blackwell Publishing Ltd.