Abstract
This paper documents persistence in brand preferences and investigates its sources. We examine the Korean soju industry, in which the government designated only one firm for each regional market and obliged consumers to purchase local brands. We find that consumers tend to purchase local brands even after this regulation was removed. To explain the persistent leadership of local firms in their respective markets, we propose an identitybased theory with three theoretical implications. In particular, we consider regionalism in Korean politics, and use presidential election results as events that triggered higher identity costs, thereby increasing local market shares of designated local companies. We find empirical evidence consistent with three theoretical implications, which is robust to several alternative specifications. We further find that various other mechanisms are not fully consistent with our data, suggesting that local identity, once established, can be an important source behind persistence in preferences for local brands.
| Original language | English |
|---|---|
| Pages (from-to) | 267-304 |
| Number of pages | 38 |
| Journal | Korean Economic Review |
| Volume | 29 |
| Issue number | 2 |
| Publication status | Published - 2013 Dec 1 |
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All Science Journal Classification (ASJC) codes
- Economics, Econometrics and Finance(all)
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Local identity and persistent leadership in market share dynamics : Evidence from deregulation in the Korean soju industry. / Choi, Jay Pil; Hong, Seung Hyun; Jeon, Seonghoon.
In: Korean Economic Review, Vol. 29, No. 2, 01.12.2013, p. 267-304.Research output: Contribution to journal › Article
TY - JOUR
T1 - Local identity and persistent leadership in market share dynamics
T2 - Evidence from deregulation in the Korean soju industry
AU - Choi, Jay Pil
AU - Hong, Seung Hyun
AU - Jeon, Seonghoon
PY - 2013/12/1
Y1 - 2013/12/1
N2 - This paper documents persistence in brand preferences and investigates its sources. We examine the Korean soju industry, in which the government designated only one firm for each regional market and obliged consumers to purchase local brands. We find that consumers tend to purchase local brands even after this regulation was removed. To explain the persistent leadership of local firms in their respective markets, we propose an identitybased theory with three theoretical implications. In particular, we consider regionalism in Korean politics, and use presidential election results as events that triggered higher identity costs, thereby increasing local market shares of designated local companies. We find empirical evidence consistent with three theoretical implications, which is robust to several alternative specifications. We further find that various other mechanisms are not fully consistent with our data, suggesting that local identity, once established, can be an important source behind persistence in preferences for local brands.
AB - This paper documents persistence in brand preferences and investigates its sources. We examine the Korean soju industry, in which the government designated only one firm for each regional market and obliged consumers to purchase local brands. We find that consumers tend to purchase local brands even after this regulation was removed. To explain the persistent leadership of local firms in their respective markets, we propose an identitybased theory with three theoretical implications. In particular, we consider regionalism in Korean politics, and use presidential election results as events that triggered higher identity costs, thereby increasing local market shares of designated local companies. We find empirical evidence consistent with three theoretical implications, which is robust to several alternative specifications. We further find that various other mechanisms are not fully consistent with our data, suggesting that local identity, once established, can be an important source behind persistence in preferences for local brands.
UR - http://www.scopus.com/inward/record.url?scp=84891601636&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84891601636&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:84891601636
VL - 29
SP - 267
EP - 304
JO - Korean Economic Review
JF - Korean Economic Review
SN - 0254-3737
IS - 2
ER -