Citation:
Eizenberg A, Salvo A. The Rise of Fringe Competitors in the Wake of an Emerging Middle Class: An Empirical Analysis. American Economic Journal: Applied Economics [Internet]. 2015;7 (3) :85-122.
Abstract:
The "emerging middle class" is a force of economic importance in many consumer markets around the globe. A striking phenomenon in some of these markets is the growth of "generic," low-price brands. This paper examines these phenomena in Brazil's large soft drink market. Our study draws on data sources that capture both social mobility and market outcomes. Our analysis suggests that the emergence of a price-sensitive, new middle class aided the staggering growth of a fringe of generic producers. Our estimated demand model rationalizes a drastic price cut, led by Coca-Cola, that allowed it to contain the fringe's growth.