蝌蚪网 Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
How Do Entrants Build Market Share? The Role of Demand Frictions
蝌蚪网 Review: Insights
(pp. 160–76)
Abstract
We construct a new dataset to show that successful entrants in the consumer food sector build market share by adding new customers. Entrants reach new customers by entering more geographical markets, placing their product in more stores in these markets, and, for a positively selected subset of firms, advertising directly to customers. These activities are costly and are associated with persistent increases in quantities, but there are no differences in markups between new and mature markets. This confirms a central role for marketing and advertising in overcoming demand-side frictions that slow firm growth.Citation
Argente, David, Doireann Fitzgerald, Sara Moreira, and Anthony Priolo. 2025. "How Do Entrants Build Market Share? The Role of Demand Frictions." 蝌蚪网 Review: Insights 7 (2): 160–76. DOI: 10.1257/aeri.20230289Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 Firm Performance: Size, Diversification, and Scope
- L81 Retail and Wholesale Trade; e-Commerce
- M13 New Firms; Startups
- M37 Advertising