Research on Price and Differentiation Game between Private Label and Manufacturer Brand

The literatures related to the price competition between private label (PL) and manufacturer brand are extremely fewer. Based on the Hotelling differentiation model, in the channel structure of the same manufacturer providing products for PL retailer and another retailer selling brand manufacturer, we established the price game model among two retailers and a manufacturer, discussed equilibrium problem of Cournot competition and Stackelberg competition between private label and manufacturer brand, and by comparing the two situations, we got a number of new conclusions: Stackelberg game situation is better than Cournot game for two products. However, at this time consumer´s interests are greatly damaged. The differentiation between private label and manufacturer brand would be useful to retailers and manufacturers.Because of retailers regarding PL as one of their differentiation strategies, this explained the reason that retailer develop own PL.