Internal analysis of asymmetric competitive market strucuture using supermarket aggregate data

• Author / Creator

  Wu, Fang

• This dissertation proposes two internal analyses of market structure that can be applied to widely available store-level brand sales and price data. The methodologies, based on either a sales response model (a reduced-form model) or a discrete choice formulation (a structural model), enable researchers to identify the latent asymmetric competitive structure within a pre-defined market.
  Chapter 2 estimates a market map of competitive brand relationships that are assumed to jointly underlie cross-price elasticities, own-price elasticities, and brand-specific intercepts in a sales response (i.e., market demand) model. The methodology uses an adaptive Bayesian approach to stabilize the estimation of demand parameters by sharing information across different brands and different model components in a set of demand equations. Drawing upon recent psychometric research, I express the asymmetries present in cross-price elasticities as the difference between what I refer to as brand power parameters, and I identify relationships between a focal brand’s power parameter, clout, vulnerability, own-price elasticity, and spatial density. I apply the model separately for two datasets that consist of weekly sales and prices for beer and soft drinks.
  Chapter 3 proposes a utility-based structural model and shows how the combination of the aggregate scanner data and forced switching data can help estimate a market map directly from a utility-based formulation. The utility function specification accounts for both vertical and horizontal differentiation across alternatives, and also incorporates consumer heterogeneity. The specification is modeled to underlie both market outcomes (e.g., unit sales) and forced switching behavior. Conceptually, the proposed model relates the concept of asymmetric competition with fundamental parameters present in the utility function.
  The two models developed in this dissertation represent complementary ways of conducting internal analysis of market structure. Chapter 4 discusses the relative advantages and disadvantages of each for application in different contexts. Chapter 1 introduces the topic of market structure analysis and summarizes antecedent research streams that have addressed this topic.

• Subjects / Keywords

  • Asymmetric competition
  • Internal analysis
  • Market structure
  • Bayesian technique
  • Aggregate date

• Graduation date

  Fall 2011

• Type of Item

  Thesis

• Degree

  Doctor of Philosophy

• DOI

  https://doi.org/10.7939/R3S34J

• License

  This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.