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The analysis of new product introduction using discrete-choice demand models has focused on successful products (e.g. the minivan) and their welfare impacts. Instead, we apply this approach to unsuccessful products to provide insight into the reasons for their failure. Our case study is the introduction and subsequent exit of Coca Cola's Vanilla Coke. Using IRI scanner data we estimate demand and supply and simulate counterfactual scenarios in which Vanilla Coke was not introduced. We then estimate Coca Cola's profit gains from the new brand and find they would not cover fixed costs. We analyze the importance of (i) overall demand for soft drinks, (ii) private label presence, (iii) rival promotion, and (iv) consumer preferences for explaining Vanilla Coke's failure, by investigating what the levels of each would have had to be for Vanilla Coke to at least cover its fixed costs. We then investigate the extent to which Coca Cola may have misjudged the levels for these variables by looking at their pre-introduction values. We find Coca Cola did anticipate part of rival reactions that made survival harder, but the actual changes were even beyond its anticipation and contributed to Vanilla Coke's exit.

We study the cost of breaching an implicit contract in a goods market. Young and Levy (2014) document an implicit contract between the Coca-Cola Company and its consumers. This implicit contract included a promise of constant quality. We offer two types of evidence of the costs of breach. First, we document a case in 1930 when the Coca-Cola Company chose to avoid quality adjustment by incurring a permanently higher marginal cost of production, instead of a one-time increase in the fixed cost. Second, we explore the consequences of the company’s 1985 introduction of “New Coke” to replace the original beverage. Using the Hirschman’s (1970) model of Exit, Voice, and Loyalty, we argue that the public outcry that followed New Coke’s introduction was a response to the implicit contract breach.

Manufacturers frequently pay fees to supermarkets when they temporarily reduce prices of their products. These funds are used by supermarkets to cover the costs of promotional campaigns and to compensate reductions in markups during promotions. Anecdotal evidence suggests that these fees are sizeable and have important consequences for firms and consumers, but little is known about them quantitatively. This paper develops a dynamic game-theoretic model where multiproduct firms compete in prices and pay a cost every time they lower prices. We use the model to study pricing behaviour in the UK butter and margarine market. The magnitudes of promotional fees are then structurally estimated as price adjustment costs. Our study produces two important conclusions. First, we find that costs firms pay to lower prices are substantial and represent between 24-34% of manufacturers' net margins. Second, our model predicts that the removal of these costs reduces persistence in prices, increases firms' profits but has little effect on consumer surplus.

The beer market in Germany may be described as a monopolistic competition with many breweries supplying a very large variety of different beer styles and brands. Advertising is one means of differentiating a product and increasing prices over marginal costs. Based on production data obtained from a sample of 197 German breweries and thirteen years of observation, we derive firm-specific markups, profit ratios and prices in each year and relate those to their advertising expenditures and firm size. We are able to show that advertising expenditures are positively correlated to a brewery's markup, profit ratio and price while firm size is negatively correlated.

This paper analyzes the effects of a merger between a German supermarket chain and a soft discounter on consumer prices. We exploit geographic variation in prices within retail chains and brands and use a difference-in-differences estimator to compare regional markets with a change in market structure to a control group in unaffected markets. Our results indicate that both insiders and outsiders raised average prices after the merger, particularly in regions with high expected change in retail concentration. In contrast, we estimate price declines in regions that did not experience a rise in concentration but were potentially affected by cost savings within the merged entity. We also provide evidence that remedies imposed by competition authorities were not sufficient to o set anti-competitive effects.

Im vorliegenden Bericht werden die Ergebnisse des Teilprojektes "Lokale Strategien für die wirtschaftliche Entwicklung" des europäischen Forschungsprojekts TRUSTEE ("Towards RUral Synergies and Trade-offs between Economic development and Ecosystem services') beschrieben. Vor dem Hintergrund der erwarteten Fachkräfteknappheit wurde am Beispiel der niedersächsischen Ernährungswirtschaft zwischen 2014 und 2016 untersucht, (1) wie sich lokale Arbeitsmärkte auf Strategien und Entwicklung der überwiegend kleinen und mittleren Betriebe des Sektors auswirken, (2) in wie fern die Betriebe Unabhängigkeit vom lokalen Arbeitsmarkt erlangen können und (3) wie die Unternehmen ihrerseits die lokalen Arbeitsmärkte beeinflussen. Die Untersuchung fand in drei Schritten statt. Im Sommer 2015 wurde eine standardisierte Befragung der Ernährungswirtschaft in Niedersachsen mit 200 antwortenden Betrieben durchgeführt, die den Hauptteil der Studie bildet. Zweitens wurden im Herbst 2015 bzw. Winter 2015/16 Workshops zum Thema Fachkräftebedarf ('Fachkräfteworkshops') in einer ländlichen und in einer eher urbanen Region Niedersachsens organisiert, dokumentiert und im Nachgang ausgewertet. Um einen tieferen Einblick in das Zusammenspiel verschiedener regionaler Organisationen zu erhalten, wurden drittens im Frühsommer 2016 Interviews mit Beteiligten regionaler Weiterbildungslandschaften in ausgewählten niedersächsischen Regionen geführt. [...] This report summarises the results of the sub-project "Local strategies for economic development" of the European Research Project TRUSTEE that ran from 2014 to 2016. Against the background of the expected scarcity of professional workers, the Lower Saxon food industry is used as an example to show how local job markets impact mainly small and medium size enterprises (SMEs) in terms of strategies and developments (1); to what extent businesses can achieve independence from the local job market (2); how the businesses, on their part, influence the local job markets (3). The study design includes three core elements: In the summer 2015 a standardized survey was carried out in the food industry in Lower Saxony with 200 responding firms. In autumn 2015 and winter 2015/16 workshops on the topic of professional staff needs were organized, documented and afterwards evaluated in a rural and in a more urban region of Lower Saxony. Finally, interviews were conducted with participants on the regional continuing education landscape in selected lower Saxon regions in the early summer 2016. [...]

Agri-food sectors are commonly considered as highly regulated, traditional and of strategic importance, mainly due to the food security issues. Changes in the related market structures are subject of constant interest because of their importance for competition and economic welfare of food producers and consumers. In Poland, a rising concentration among various branches of the food industry can be observed. The main objective of the article was to depict the changes of the market power execution in the Polish food sector and its branches in the period 2002-2013. As a measure of this phenomenon the markups of price above the marginal cost were applied and for their estimation two methods were used, namely the Roeger method involving primal and dual Solow residuals and the method based on the marginal cost of labor. Yearly data for 32 food sector branches and various accounting categories were used in the calculations. It was found that in the analyzed period the markup over marginal cost on average amounted to 10.4% and it was increasing over time. The labor input category seemed to be not sufficient for the markup calculation. The evolution of the monopolistic power in the Polish food sector appears to be associated not only with the business cycle, but also with the sector developments accelerated by the accession to the EU. Moreover, the differences in results for the branches indicate a considerable heterogeneity in the Polish food industry companies pricing practices.

Relative to non-food items, food tends to be cheaper in rich, as compared with poor European countries. This tendency cannot be explained in terms of cost developments or foreign-trade considerations. A positive explanation proposed focuses on demand-income-supply interaction. An analysis of a cross-country price-augmented modification of Engel's Law, econometrically specified, indicates that the relative price of food is related positively to the supply of food items and negatively to that of non-food items. This finding is consistent with "agricultural price scissors", and also casts a different light on the nature of economic development and structural change. JEL Codes: D12, L11, L66, Q11 Keywords: Food, Prices, Moneta e Credito, V. 57, N. 227 (2004)

Este plano de negócios tem a finalidade de, não só apresentar e fundamentar a estratégia de implementação do restaurante Paladares de Portugal, bem como, e paralelamente a isso, introduzir um conceito inovador na cozinha tradicional Portuguesa – o Fast Good. Com base na Revisão de Literatura, Análise de Mercado (Actual e Futura), Análise Interna e Competitiva, foi definida uma Estratégia de Implementação e Desenvolvimento para o Paladares de Portugal, com o intuito de criar um novo segmento no sector da Restauração Portuguesa. Muito embora os promotores deste projecto não tenham experiência profissional na restauração, a realização do mesmo, contou com o apoio, tanto ao nível operacional como ao nível estratégico, de diversos empresários ligados ao mesmo. O Paladares de Portugal irá exercer a sua actividade na Avenida Duque de Loulé n.º 3A. Posicionando-se como o primeiro restaurante em Portugal a aliar o conceito Fast Good à cozinha tradicional Portuguesa, o principal objectivo será o de preencher um nicho de mercado no sector da restauração, que é constituído por pessoas que procuram um serviço rápido, barato e de qualidade, num ambiente agradável e com características únicas. O plano de negócios apresenta a estrutura organizacional, as vantagens competitivas e o investimento necessário para a implementação do mesmo. Os factores apresentados permitem concluir que financeiramente o projecto é viável, bem como existe na zona do Saldanha mercado para o desenvolvimento do negócio. Deste modo, é correcto afirmar que nos encontramos perante um projecto vencedor. This Business Plan aims, not only to provide and support the implementation strategy of the restaurant Paladares de Portugal, but also, in parallel to this, introducing an innovative concept in traditional Portuguese cuisine – Fast Good. Based on Literature Review, Market Analysis (Current and Future), Internal Analysis Competitive, was defined an Implementation and Development Strategy for the Paladares de Portugal, with the intend of creating a new segment in the Portuguese Restoration sector. Although the promoters do not have professional experience in the restoration sector, the accomplishment of this project was supported, at both the operational and strategic level, by several businessmen connected to it. The Paladares de Portugal will carry out his activity on Avenida Duque de Loulé n.º 3A. Positioning itself as the first restaurant in Portugal to unite the Fast Good concept to the traditional Portuguese cuisine, the main goal will be to fill a market niche in the restaurant sector, which consist in people seeking a fast, cheap and quality service, in a pleasant environment with unique features. The Business Plan provides the organizational structure, competitive advantages and the investment required for the implementation. The factors presented, allow us to conclude that there is financial viability for the project, as well a market in the Saldanha area for the business growth. Therefore, we can say we have here a winning project.

El presente trabajo desarrolla una metodología de estimación de sistemas de demanda, que sirve para calcular la elasticidad crítica a utilizar en la definición de mercados relevantes dentro de un sector en particular, y para simular los efectos unilaterales de fusiones horizontales que puedan producirse entre empresas que operan en dicho sector. Todo el método se basa en la utilización de las distintas elasticidades de largo plazo estimadas, y es esencialmente el mismo para definir los mercados y para simular las fusiones. El trabajo concluye con una ilustración empírica del método, que utiliza datos de los mercados argentinos de cerveza y de galletitas. This paper develops a methodology for estimating demand systems, useful to calculate critical elasticities to be used in market delineation, and to simulate the unilateral effects of horizontal mergers. The whole method is based on the use of estimated long-run price elasticities, and it is essentially the same when defining the relevant markets and when simulating the mergers. The paper also includes an empirical illustration of the method, which relies on data from the Argentine beer and biscuit markets.

Ähnlich wie in den anderen MOEL hatte auch in der Slowakei der Systemwechsel Anfang der 90er Jahre drastische Folgen für den Agrar- undb Ernährungssektor. Die Konsumenten reagierten auf die Abschaffung der Verbrauchersubventionen bei Milch und Milchprodukten mit deutlicher Einschränkung ihrer Nachfrage. Gleichzeitig schrumpfte die Milchproduktion seit Transformationsbeginn auf gegenwärtig etwa die Hälfte des Niveaus von 1989. Molke-reien wurden geschlossen bzw. mit stetig wachsenden Überkapazitäten betrieben. In den letzten Jahren vor dem EU-Beitritt waren die Aktivitäten in diesem Sektor in erster Linie auf die Anpassung an EU-Standards gerichtet. Mittlerweile ist die slowakische Milchverarbeitung überwiegend in ausländischer Hand. Der Pro-Kopf-Konsum von Milch und Milchprodukten hat sich auf einem sehr niedrigen, von Ernährungsexperten als gesundheitlich bedenklich beurteilten, Niveau eingependelt. Dieser Diskussionsbeitrag hat eine Zusammenschau von Informationen über den slowakischen Milchsektor zum Inhalt, die die ganze Kette von der Primärproduktion über Verarbeitung und Handel bis hin zum Verbrauch umfasst. Eingebettet sind diese Ausführungen in eine Darstellung der demographischen, wirtschaftlichen und marktpolitischen Rahmenbedingungen der Slowakei. Like in other CEEC, transition in the beginning of the 1990s had significant consequences for the agricultural and food sectors in Slovakia. For example, Slovakian consumers reacted to the abolition of consumer subsidies by drastically reducing their consumption of milk and milk products. Concurrently, milk production declined and now stands at fifty percent of its 1989 level. Dairies were closed down while those remaining carried on producing under constantly increasing overcapacities. In the years prior to EU accession, activities in the milk sector were primarily aimed at the adoption of EU standards. Meanwhile, the Slovakian milk processing industry is predominantly in the possession of foreign investors. Present per capita consumption of milk and milk production is still at a very low level, which nutrition experts assess as an alarming health risk. This paper contains an overview of the Slovakian dairy sector, which comprises the complete milk chain - from primary production to processing and retailing up to consumption. The description is complemented by background information on demographic, economic and political parameters in Slovakia.

Despite significant progress in recent years, horizontal and vertical integration of the Lithuanian milk sector is not very much advanced. The primary sector is characterised by small-scale farming, the fragmentation of farmland and a low number of livestock per farms. These features cause severe problems regarding the restructuring and modernisation of agricultural production since only a few farmers possess the capital resources to conduct necessary investments. However, despite the unfavourable conditions Lithuanian milk producers have made significant improvements concerning milk quality. In the last decade, the processing sector was due to drastic concentration processes. These were induced by the strong competition processes on the milk market and fostered by foreign direct investors. Today, the market is dominated by three companies. About ten enterprises supply almost the entire market of dairy products. The main mode of governance in the market for raw milk is contractual arrangements. The spot market of strong vertical control are unimportant. The basic rules of the contracts like duration or payment scheme are set by the Ministry of Agriculture, others, especially prices, are negotiated individually between farmer and processor. Because of advantages in terms of transport and transaction costs processors provide better conditions to large agricultural producers. Often the processors try to strengthen their relationships with large-scale producers by providing credits for farm modernisation and/or foodstuff. Most small producers do not deliver directly to processors but to milk collection centres. In general, these are owned by processors. So far, only a few farmers co-operatives have been established in order to take this function. Contractual arrangements also dominate in the distribution channel. Small processors supply mainly to wholesalers who supply the retail market. Large processors often circumvent the wholesale stage and supply the retail stage directly. The basic means which allow this forward integration are intensive marketing activities which are intended to improve the consumer perception of their products. However, this type of exchange is mainly observed in urban areas where well established large retail chains exist. The Lithuanian milk sector is highly internationally competitive. The expansion to international markets is in the responsibility of the individual firms. However, the Lithuanian government and the food processors have established a joint marketing agency that provides infrastructure and joint marketing for international trade.

Using brand level retail data, the firm size distribution in Carbonated Soft Drinks is shown to be an outcome of the degree to which firms have placed brands effectively (store coverage) across vertical (flavour, packaging, diet attributes) segments of the market. Regularity in the firm size distribution is not disturbed by the nature of short-run brand competition (turbulence in brand market shares) within segments. Remarkably, product differentiation resulting from firms acquiring various portfolios of product attributes and stores in market evolution determines the limiting firm size distribution.

Meat processing represents a strategic sector that can significantly contribute to local food industry competitiveness and national food security. The generous natural resources available to Romania and the tradition in animal husbandry can provide adequate raw materials for the processing industry in order to cover domestic consumption needs and obtain substantial revenues by export. Currently, Romanian meat market is dependent on the imports of meat, as carcasses or processed products. There have been mainly live animals or semi-finished products which are exported, fact which led to an imbalance of trade and to low revenues for the domestic meat industry. This article proposes an analysis of the local meat processing industry in terms of production, consumption and trade transactions, assessed in the international context of the meat market. The study indicates that in the last few years, Romania has recorded significant progress in the meat processing and production domain; nevertheless, the financial performance of the local companies is inferior to that of the EU companies. Except the poultry meat and mutton sectors, in which the export value exceeds imports, the other sectors show a deficit, the domestic demand not being covered. The low concentration degree of the companies from the meat processing industry show a continued market fragmentation and a growth potential for the existing companies.