Abstract :
The paper assesses how the value added created by the existence of an organic label in a vertical
chain is shared among manufacturers and retailers in the French fluid milk market. Using a struc-
tural econometric model of consumer substitution patterns and of vertical relationships, we show
that organic label leads to a higher bargaining power in favor of manufacturer. Total margins are
heterogeneous among products. They are lower for organic brands (37%) compared to conventional
ones (52%). On the contrary, …rms would benefit more from organic products than for conventional
milk while our results suggest the opposite result for retailers.