Abstract
In this paper, residual demand analysis is applied to test whether carbonated soft drinks is a relevant product market. The residual demand elasticity for carbonated soft drinks is estimated using weekly A.C. Nielsen Scanner price and quantity data for carbonated soft drink products purchased in supermarkets in the United States. The estimated residual demand elasticity and average contribution margin for carbonated soft drinks suggest that a market for carbonated soft drinks is too narrow for purposes of merger analysis according to the Merger Guidelines established by the United States Department of Justice and the Federal Trade Commission.
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Two of the authors, Kaplan and Tollison, have served as consultants to and received research support from PepsiCo, Inc. The present project, though an aoutgrowth of this earlier work, received no support from PepsiCo, Inc. or any other source. The views expressed in the article are soley those of the authors, and the authors are responsible for any errors or omissions.
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Higgins, R.S., Kaplan, D.P., Mcdonald, M.J. et al. Residual demand analysis of the carbonated soft drink industry. Empirica 22, 115–126 (1995). https://doi.org/10.1007/BF01384649
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DOI: https://doi.org/10.1007/BF01384649