Does Market Concentration Promote or Reduce New Product Introductions? Evidence from US Food Industry



for non-spherical disturbances. The models with exogenous and endogenous
concentration have been estimated by GLS and GMM methods respectively
12.

The results indicate that the market concentration increases product introductions.
One percent increase in HI (CI4) leads to approximately 1.5 (1.3) percent increase in
NPI. The estimates also depict that number of firms and R&D intensity increase new
product introductions. The result that market concentration has a positive effect on new
product introductions provides evidence in support of the anticipatory mergers theory.
We proceed to test the channel through which this positive effect comes into play i.e. the
effect of NPIs on subsequent mergers.

B. Testing the Anticipatory Mergers Theory

Using annual data on number of mergers in the processed food industry we test
the hypothesis that NPI spurs subsequent mergers. This analysis covers the period 1991
to 2004
13. Due to data limited data availability, the mergers analysis covers a subset of
the time frame covered by the NPI analysis. This analysis is conducted using aggregated
processed food industry data as well as data classified by various food segments. The
classification of different food segments is also different for this part of the analysis as
the classification of mergers data was different from the classification for NPI data
available to us. The large number of mergers specified under diversified food categories
posed a difficult problem for matching them adequately with the NPI categories. The

12 The models with exogenous concentration have been estimated using ‘xtgls’ procedure in Stata taking
into account panel level serial correlation and heteroskedasticity. The models with endogenous
concentration have been estimated by two step GMM estimation procedure using the ‘gmm’ option with
‘xtivreg2’ in Stata that accounts for the endogeneity of concentration and adjusts for heteroskedasticity and
autocorrelation as well as.

13 Data Source: Various issues of ‘The Food Institute Report’. Due to data limited data availability, the
mergers analysis covers a subset of the time frame covered by the NPI analysis.

12



More intriguing information

1. Influence of Mucilage Viscosity On The Globule Structure And Stability Of Certain Starch Emulsions
2. The demand for urban transport: An application of discrete choice model for Cadiz
3. Spectral density bandwith choice and prewightening in the estimation of heteroskadasticity and autocorrelation consistent covariance matrices in panel data models
4. A methodological approach in order to support decision-makers when defining Mobility and Transportation Politics
5. CREDIT SCORING, LOAN PRICING, AND FARM BUSINESS PERFORMANCE
6. The bank lending channel of monetary policy: identification and estimation using Portuguese micro bank data
7. Determinants of U.S. Textile and Apparel Import Trade
8. Gerontocracy in Motion? – European Cross-Country Evidence on the Labor Market Consequences of Population Ageing
9. THE CHANGING RELATIONSHIP BETWEEN FEDERAL, STATE AND LOCAL GOVERNMENTS
10. The name is absent