Concentration, Product Variety, and Entry-for-Merger: Evidence from New Product Introductions in the U.S. Food Industry

Haimanti Bhattacharya and Robert Innes ()

American Journal of Agricultural Economics, 2016, vol. 98, issue 5, 1360-1376

Abstract: Competing theories in industrial organization predict that more concentrated industries will lead to a smaller and more efficient variety of products or, alternately, a larger and less efficient array of products. This paper presents an empirical study of these competing implications that estimates the impact of market concentration on new product introductions in a panel of nine food processing industries over 1983 to 2004. Controlling for industry-level unobservables (using fixed effects) and endogeneity of industry market structure, we find that industry concentration promotes the introduction of new products. Preliminary evidence also suggests that new product introductions spur subsequent food industry mergers. Both conclusions are consistent with the “entry-for-merger” theory of product variety wherein atomistic innovators introduce new products in anticipation of profitable future mergers with concentrated firms.

Keywords: Market concentration; mergers; new product introductions (search for similar items in EconPapers)
JEL-codes: L1 L2 L66 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/ajae/aaw070 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Concentration, Product Variety and Entry-for-Merger: Evidence from New Product Introductions in the U.S. Food Industry (2015)
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:oup:ajagec:v:98:y:2016:i:5:p:1360-1376.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().