Date & Time：July 16,2016 10:00 - 11:30a.m.
Venue：SEM320 Meeting Room
In this paper, we study how multiproduct firms compete using non-price strategies in an industry where all firms charge the same price. Using Nielsen data on prices, sales, and promotions of biscuit manufacturers in India, we find that products with one standard deviation higher productivity offer, on average, 1.5% more quantity for the same price. Firms also compete by offering volume promotions for more productive products. Using non-price strategies, more productive products appear to gain market share, indicating competition thrives under the veil of uniform pricing. Our results are robust to alternative methods of estimating product-level productivity controlling for input measurement, simultaneity, and product scope biases. We examine welfare effects of uniform pricing for urban and rural consumers and also of deviating from uniform pricing.
Ajay Bhaskarabhatla is an associate professor at Erasmus School of Economics, Erasmus University Rotterdam. Ajay received his PhD from Carnegie Mellon University and Masters from Georgia Institute of Technology. Ajay’s research examines the evolution of segmented industries and patent and disclosure strategies of firms. Ajay’s recent work also investigates business strategies and corporate governance in emerging economies. In particular, recent work investigates pricing strategies of pharmaceutical and FMCG firms in India and the consequences of corporate board interlocks with shell companies.