How do entrants build market share?

David Argente, Doireann Fitzgerald, Sara Moreira and Anthony Priolo

No 388451749, Working Papers from Lancaster University Management School, Economics Department

Abstract: Firms are born small, grow, and die. We investigate an explanation for this process based on frictions in the accumulation of customers, across and within markets segmented by geography. We use matched retail scanner and TV advertising data on consumer food to show that entrants grow both by adding customers in new markets and by reaching new customers in continuing markets. Growth in market share within markets is not associated with changes in markups, but is associated with advertising. We use these facts to motivate and estimate a structural model of customer accumulation within and across markets. This allows us to estimate both the distribution of intrinsic heterogeneity across firms, and frictions in the accumulation of customers. We find that these frictions contribute substantially to heterogeneity in firm size, and to the gradual process of firm growth.

References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:lan:wpaper:388451749

Access Statistics for this paper

More papers in Working Papers from Lancaster University Management School, Economics Department Contact information at EDIRC.
Bibliographic data for series maintained by Giorgio Motta ().