An Econometric Analysis of Brand Level Strategic Pricing Between Coca Cola and Pepsi Inc

Tirtha P. Dhar, Jean-Paul Chavas (), Ronald W. Cotterill and Brian W. Gould

No 25231, Research Reports from University of Connecticut, Food Marketing Policy Center

Abstract: Market structure and strategic pricing for leading brands sold by Coca Cola and Pepsi Inc. are investigated in the context of a flexible demand specification and structural price equations. This approach is more general than prior studies that rely upon linear approximations and interactions of an inherently nonlinear problem. We test for Bertrand equilibrium, Stackelberg equilibrium, collusion, and a general conjectural variation (CV) specification. This nonlinear Full Information Maximum Likelihood (FIML) estimation approach provides useful information on the nature of imperfect competition and the extent of market power.

Keywords: market structure; strategic pricing; conjectural variations; price reaction; carbonated soft drinks; Demand and Price Analysis (search for similar items in EconPapers)
Date: 2002
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Persistent link: http://EconPapers.repec.org/RePEc:ags:uconnr:25231

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