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Estimation of the Effects of New Brands on Incumbents' Profits and Consumer Welfare: The U.S. Processed Cheese Market Case

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  • Donghun Kim

Abstract

We estimate the effects of new brands on market competition and consumer welfare in the U.S. processed cheese market. We find that an observed increase in consumer welfare was attributable mainly to an increase in the number of brands in the sample market, while the price effect, which measures welfare change caused by adding new brands to existing brands, decreased welfare as the prices of the existing brands increased in a large portion of sample markets. The price increase was most pronounced among the introducer?s existing brands.

Suggested Citation

  • Donghun Kim, 2004. "Estimation of the Effects of New Brands on Incumbents' Profits and Consumer Welfare: The U.S. Processed Cheese Market Case," Food Marketing Policy Center Research Reports 079, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  • Handle: RePEc:zwi:fpcrep:079
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    File URL: http://fmpc.uconn.edu/publications/rr/rr79.pdf
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    References listed on IDEAS

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    1. Aviv Nevo, 2003. "New Products, Quality Changes, and Welfare Measures Computed from Estimated Demand Systems," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 266-275, May.
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    Cited by:

    1. Freyberger, Joachim, 2015. "Asymptotic theory for differentiated products demand models with many markets," Journal of Econometrics, Elsevier, vol. 185(1), pages 162-181.
    2. Villas-Boas, Sofia B & Bonnet, Celine & Hilger, James, 2017. "Wtp 4 Weo," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt160178v4, Department of Agricultural & Resource Economics, UC Berkeley.

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