Common Ownership, Creative Destruction, and Inequality: Evidence from U.S. Consumers

AFA San Diego Meeting

Posted: 21 Sep 2019 Last revised: 14 Oct 2019

See all articles by Hadiye Aslan

Hadiye Aslan

Georgia State University - Department of Finance

Date Written: September 12, 2019

Abstract

Using granular data from the consumer goods industry, we study pricing and non-pricing effects of common ownership at the product level. We find positive elasticity of consumer goods prices to common ownership and that firms pass along price increases to consumers through the marginal cost channel. Our results are robust to using Bartik-like shifters for market shares and variations in common ownership driven by financial mergers. We present the first large-scale systematic evidence on the relationship between common ownership and creative destruction at the product level. Our results show that common owners introduce new products at a faster rate and discontinue existing product items at a similar pace compared to control firms, resulting in greater net variety. Finally, we provide new insights in that the rate of increase in consumer goods prices is higher in product modules catering to lower-income households, whereas consumers in high-income segments benefit more from the increase in product variety due to higher common ownership. These results deliver important parameters to highlight the contrasting effects of increased common ownership on consumer segments across income distribution.

Keywords: Common ownership, Retail and wholesale data, Inequality, Creative destruction

JEL Classification: L10; D12; D40; G23; G28

Suggested Citation

Aslan, Hadiye, Common Ownership, Creative Destruction, and Inequality: Evidence from U.S. Consumers (September 12, 2019). AFA San Diego Meeting, Available at SSRN: https://ssrn.com/abstract=3452765

Hadiye Aslan (Contact Author)

Georgia State University - Department of Finance ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
512
PlumX Metrics