An option-pricing look at the introduction of private labels

Authors
Citation
I. Horowitz, An option-pricing look at the introduction of private labels, J OPER RES, 51(2), 2000, pp. 221-230
Citations number
28
Categorie Soggetti
Management,"Engineering Mathematics
Journal title
JOURNAL OF THE OPERATIONAL RESEARCH SOCIETY
ISSN journal
01605682 → ACNP
Volume
51
Issue
2
Year of publication
2000
Pages
221 - 230
Database
ISI
SICI code
0160-5682(200002)51:2<221:AOLATI>2.0.ZU;2-H
Abstract
This paper uses an option-pricing model to explore the impact of various fa ctors on whether and when a retailer will choose to introduce a private lab el in a product category that is currently the exclusive domain of a manufa cturer. Among the factors considered are the retailer's and manufacturer's margins, the cost of introducing the private label, the shelf space to be d evoted to the private label and by consequence the store-market share to be captured by it, and the quality of the private label.