Consumer cooperatives are currently of greater interest in the U.S., than at any time in recent history, but the experiences of those recently established have been very mixed. There is a great need for factual information to record those experiences and identify factors and conditions that have led to success or failure. In addition, there are continuing serious deficiencies in the food distribution system that serves the inner‐city poor. This article deals with both of these problem areas in examining the role and potential for consumer food cooperatives, with special attention to low‐income, urban areas.
A recent article in this Journal by Parker and Connor (PC) concluded that seller concentration in food manufacturing resulted in consumer overcharges equal to $11.5 billion in 1975. The study has limitations that are important in properly interpreting the findings and in designing future research.PC employed three estimating approaches: an adaptation of Scherer's consumer-loss estimates for the entire economy, a price-cost model by Preston and CoUins, and an original Parker-Connor model based upon national brand-private label price differences. This comment focuses on the first and third approaches; the second was not examined.
The National Brand-Private Label Price Difference EstimateThe national brand-private label model, or PC model, assumes that price differences associated with brand types reflect consumer loss caused by market power in food manufacturing. National brand products often are more embellished than private label products of the same product group, however, and consumers probably derive additional intangible value from quality assurances accorded national brands. Price differences cannot be labeled as consumer loss unless real and perceived product differences are of no value to consumers.Selling Areas Marketing, Inc. (SAMI) data for 170 product categories were classified by PC into 53 five-digit SIC categories which
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