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How Much Do Consumers Benefit from New Brand Introductions? The Case of Potato Chips

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  • Arnade, Carlos Anthony
  • Gopinath, Munisamy
  • Pick, Daniel H.

Abstract

This study identifies consumer welfare from new brand introductions in the potato chip market. Price and variety effects of new brand introduction are measured by estimating a demand system underlying an expenditure function. Variety effects are positive in most cities, while price effects are generally negative when consumers exhibit some variety preference. Variety effects dominate price effects in most cities; an opposite effect observed in some cities may indicate high entry barriers or joint brand- and price-based marketing strategies. Results indicate that consumers and producers gain from product innovations, but substantial regional variation exists in the distributional effects of new brand introduction.

Suggested Citation

  • Arnade, Carlos Anthony & Gopinath, Munisamy & Pick, Daniel H., 2011. "How Much Do Consumers Benefit from New Brand Introductions? The Case of Potato Chips," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(01), pages 1-17, April.
  • Handle: RePEc:ags:jlaare:105529
    DOI: 10.22004/ag.econ.105529
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    References listed on IDEAS

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    3. Daniel Toro-Gonzalez & Jia Yan & R. Karina Gallardo & Jill J. McCluskey, 2013. "Estimation of Unobserved Attributes Using a Control Function Approach, Modeling the Demand for Mint Flavored Gum," Working Papers 2013-06, School of Economic Sciences, Washington State University.
    4. He, Wentao & Hao, Xiaoli, 2023. "Competition and welfare effects of introducing new products into the new energy vehicle market: Empirical evidence from Tesla’s entry into the Chinese market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 174(C).

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