Micro-responses to shocks: Pricing, promotion, and entry

Sofronis Clerides, Alexis Antoniades and Mingzhi (Jimmy) Xu

No 13281, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the market response to firm-specific demand shocks in a natural experiment setting. In 2006, a boycott of Danish products in several Arab countries was devastating for Danish cheese products firms. In Saudi Arabia their market share collapsed from 16.5% in January to below 1% in March and never fully recovered: by 2009 it was 6.3%. By analyzing micro-level (scanner) price and sales data, we find that: (i) Danish firms lowered prices but kept the product mix the same; (ii) non-Danish firms kept prices constant but changed their product mix by introducing new products and new product bundles; and (iii) non-Danish firms chose to introduce products that were similar to the Danish in characteristic space in order to compete head-to-head. We complement the analysis with a theoretical framework that helps to account for our main findings.

Keywords: Boycotts; Multi-product firms; Demand shock; Saudi arabia (search for similar items in EconPapers)
JEL-codes: L10 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP13281 (application/pdf)

Related works:
Journal Article: Micro‐responses to shocks: pricing, promotion, and entry (2023)
Working Paper: Micro-responses to shocks: Pricing, promotion, and entry (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13281

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP13281

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().