Store Brand Strength

Store brands play many beneficial roles for retailers. While some roles such as creating a quality image for the retailer require relatively strong store brands, other roles such as segmentation of customers by income require lesser strong store brands. This paper shows another role of store brand that requires a relatively less strong store brand. Specifically, in a setting in which national brand manufacturers selling to a retailer attempt to engage in non-cooperative tacit pricing collusion among one another, we show that having a very strong store brand can hurt the retailer by increasing the likelihood of national brand manufacturers sustaining tacit collusion.