How firms compete when they set identical prices: Nonprice strategies in the Indian biscuit industry

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

How do firms compete when all firms in an industry set identical prices? Using Nielsen data on India's biscuit manufacturers, we document productivity‐based competition on nonprice strategies under industry‐wide uniform pricing. Products with one standard deviation higher quantity‐based productivity contain, on average, 13% more quantity per pack for the same price. Productivity also positively correlates with promotions on pack size, availability, and variety. A higher price (per pack size) sensitivity in rural markets combined with industry‐wide uniform pricing imposes a greater burden on rural consumers. Additional analyses show that firms can reduce this burden by selling different pack sizes in urban and rural areas.
Original languageEnglish
Pages (from-to)733-756
Number of pages24
JournalJournal of Economics and Management Strategy
Volume32
Issue number4
Early online date5 Mar 2023
DOIs
Publication statusPublished - 1 Oct 2023

Bibliographical note

Publisher Copyright:
© 2023 The Authors. Journal of Economics & Management Strategy published by Wiley Periodicals LLC.

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