Local Identity and Persistent Leadership in Market Share Dynamics: Evidence from Deregulation in the Korean Soju Industry

Jay Choi, Seung-Hyun Hong and Seonghoon Jeon
Additional contact information
Seonghoon Jeon: Sogang University

Korean Economic Review, 2013, vol. 29, 267-304

Abstract: This paper documents persistence in brand preferences and investigates its sources. We examine the Korean soju industry, in which the government designated only one firm for each regional market and obliged consumers to purchase local brands. We find that consumers tend to purchase local brands even after this regulation was removed. To explain the persistent leadership of local firms in their respective markets, we propose an identitybased theory with three theoretical implications. In particular, we consider regionalism in Korean politics, and use presidential election results as events that triggered higher identity costs, thereby increasing local market shares of designated local companies. We find empirical evidence consistent with three theoretical implications, which is robust to several alternative specifications. We further find that various other mechanisms are not fully consistent with our data, suggesting that local identity, once established, can be an important source behind persistence in preferences for local brands.

Keywords: Local Identity; Brand Loyalty; Market Shares; Soju Industry (search for similar items in EconPapers)
JEL-codes: D12 L1 L51 L66 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20131231-29-2-02.pdf (application/pdf)

Related works:
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:kea:keappr:ker-20131231-29-2-02

Access Statistics for this article

Korean Economic Review is currently edited by Kyung Hwan Baik

More articles in Korean Economic Review from Korean Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by KEA ().