A BLP demand estimation for an Argentinian food industry : heterogeneity of preferences and welfare impact of changes in market structure

Abstract

This paper analyzes the demand of frozen fried potatoes in an important city of Argentina, Mar del Plata, and the effect of changes in market structure on consumer welfare. We find that high income individuals are more concerned about health and nutrition, and that younger and lower-income consumers are more price sensitive. The results suggest that consumer surplus would decrease with a merger between the two smaller firms of the market, and would increase if the market turned into a single-product firms industry. The influence of these counterfactual changes would be greater for wealthier and older individuals. This article contributes to the analysis of a food market which is rapidly growing in developing countries and is starting to play a more relevant role in consumers’ diet.