We empirically investigate the impact of category captaincy, an arrangement where the retailer works exclusively with a manufacturer to manage both the manufac-turer’s and his rivals’ products. Using a unique data set that contains information on category captaincy as well as SKU-store-level sales and price across 24 retail chains and eight local markets in the United States for a frozen food category, we quantify the impact of captaincy on prices, assortments, profits, and consumer welfare. Interestingly, our estimates suggest that captaincy can lead to welfare gains for consumers, which argues against a purely negative view of captaincy by policy makers.
Bibliographical noteFunding Information:
The authors thank Mauricio Varela, Mark Bergen, Amil Petrin, Kyoo Il Kim, Minjung Park, and Suman Basuroy for helpful advice. In addition, the authors thank seminar participants at the Carlson School of Management; University of Toronto; McGill University; University of Western Ontario; University of California, Los Angeles; University of Arizona; University of Rochester; Penn State University; and University of Iowa for their helpful comments and Noah Houg for help during data collection. The data for this study were generously provided by a national food manufacturer and AC Neilsen. The research was graciously supported by the Institute for Research in Marketing, Carlson School of Management.
© 2020 INFORMS.
- Category captaincy
- Category management
- Moment inequalities
- Structural models