First Draft. Very Preliminary. Do not cite.

In this paper, we assess the e¤ect of private labels on retailer competition by estimating a structural model of demand and supply. Private labels can play two roles in this competition. First, they may serve as a di¤erentiation tool for the retailers in order to soften price competition. Second, they may help the retailers to obtain better conditions from their manufacturers. Di¤erentiation is taken into account by estimating a discrete-continuous choice model for the demand side, with the retailers policy towards private labels entered as one of the characteristics. For the supply side, we propose simultaneous location-and-price game between retailers and use its \u85rst-order conditions together with the demand parameters to derive estimates for marginal costs and for the elasticity of marginal costs to increases in the retailerso¤er of private labels.