The Rise of Fringe Competitors in the Wake of an Emerging Middle Class: An Empirical Analysis
American Economic Journal: Applied Economics
vol. 7,
no. 3, July 2015
(pp. 85-122)
Abstract
The "emerging middle class" is a force of economic importance in many consumer markets around the globe. A striking phenomenon in some of these markets is the growth of "generic," low-price brands. This paper examines these phenomena in Brazil's large soft drink market. Our study draws on data sources that capture both social mobility and market outcomes. Our analysis suggests that the emergence of a price-sensitive, new middle class aided the staggering growth of a fringe of generic producers. Our estimated demand model rationalizes a drastic price cut, led by Coca-Cola, that allowed it to contain the fringe's growth. (JEL D12, L11, L66, L81, M37, O12, O14)Citation
Eizenberg, Alon, and Alberto Salvo. 2015. "The Rise of Fringe Competitors in the Wake of an Emerging Middle Class: An Empirical Analysis." American Economic Journal: Applied Economics, 7 (3): 85-122. DOI: 10.1257/app.20130104Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
- L81 Retail and Wholesale Trade; e-Commerce
- M37 Advertising
- O12 Microeconomic Analyses of Economic Development
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
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