Private Label Expansion and Supermarket Milk Prices

This article investigates the impacts of private labels (PLs) on fluid milk prices and price differentials using 2,759 supermarket-level observations from 10 cities. Non-parametric results reveal that although PL milk prices decrease as PL milk shares expand, eventually the effect is to increase the prices of manufacturers’ brands as well as the price gap between private labels and manufacturers’ brands. Econometric results further reveal that supermarkets exert some degree of price discrimination through controlling the brands of milk sold.