How Do Firms Build Market Share?

Doireann Fitzgerald and Anthony Priolo ()

No 414, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: The question of how firms build market share matters for firm dynamics, business cycles, international trade, and industrial organization. Using Nielsen Retail Scanner data for the United States, we document that in the consumer food industry, brands experience substantial growth in market share in the first four years after successful entry into a regional market. However, markups are flat with respect to brand tenure. This finding is at odds with a large literature on customer markets which argues that firms acquire customers by temporarily offering low markups, and later raise markups once customers are locked in. However, it is consistent with a literature which em- phasizes the importance of marketing and advertising activities for building market share.

Date: 2019
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Working Paper: How Do Firms Build Market Share? (2018)
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