The Nature and Benefits of National Brand/Private Label Competition

Abstract

The article highlights the history of national brand/private label competition. It argues that the private labels of large retail chains possess unique competitive weapons to constrain the market power of powerful national brands that are not available to rival manufacturers' brands. Consumer welfare is maximized when private labels and national brands compete vigorously rather than when either one is too dominant. There is some ominous recent evidence that the vigor of national brand/private label competition is sometimes being diminished by collusion between the two kinds of brands.