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

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

Haimanti Bhattacharya^* and Robert Innes^**
University of Arizona

(Draft: April 2007)

Abstract

This study analyzes the relationship between market concentration and new
product introductions using an extensive annual panel data set covering the period 1983
to 2004 from the US processed food industry. We test the new theory, which argues that
new product introductions are influenced by the anticipation of future mergers. The
evidence suggests that market concentration increases new product introductions and
product introductions spur subsequent mergers in the US processed food industry. Hence
it provides evidence in support of the anticipatory mergers theory.

^* Department of Economics, University of Arizona. Email: [email protected]

^** Department of Agricultural & Resource Economics, University of Arizona. Email: [email protected]
Financial support from the Cardon Endowment is gratefully acknowledged.

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