Split Apart: Differentiation, Diversion, and Coordination in the Market for Superpremium Ice Cream
- (pp. 573-78)
AbstractI explore recent behavior in the market for superpremium ice cream. I first document that the flavors offered in supermarkets by Ben & Jerry's and Haagen-Dazs became increasingly differentiated from 2006–2013. Using an estimated model of demand, I show that this differentiation increased profits for both firms. Also, unilateral deviation from the set of products offered in 2013 would have increased variable profits for the deviating firm. These facts, when coupled with anecdotal evidence, suggest that these firms tacitly coordinated their choice of flavors. A companion piece, Sullivan (2019), formalizes this result and quantifies the implications for outcomes and welfare.
CitationSullivan, Christopher. 2020. "Split Apart: Differentiation, Diversion, and Coordination in the Market for Superpremium Ice Cream." AEA Papers and Proceedings, 110: 573-78. DOI: 10.1257/pandp.20201011
- D22 Firm Behavior: Empirical Analysis
- L25 Firm Performance: Size, Diversification, and Scope
- L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
- L81 Retail and Wholesale Trade; e-Commerce