ESSAYS ON CONSUMER DEMAND, POLICY, AND MARKET STRUCTURE

Abstract

This dissertation explores how consumers respond to changes in policy, product offerings, and firm behavior in the U.S. food and beverage industry. Through three empirical essays, it examines how consumer choices adapt to new taxes, product introductions, and distribution changes—and how these adjustments vary across demographic groups and market environments. The second chapter analyzes the impact of sugar-sweetened beverage taxes in five U.S. cities using NielsenIQ Retail Scanner and Consumer Panel data. A staggered Difference-in-Differences (DID) analysis finds that taxed soda prices increased by 15%, while sales declined by 17%. However, city-level effects vary: Philadelphia saw the largest decline (30%), while other cities showed smaller or insignificant effects. Pass-through rates ranged from 20% to 80%, with higher rates linked to larger sales declines. Effects are heterogeneous across retail channels and package sizes. Food stores saw the steepest reductions, while drug stores exhibited smaller or even positive effects. Larger package sizes experienced the sharpest declines, while single-serving products showed small changes. Beyond direct reductions, consumers adjusted through cross-border shopping and substitution. Taxed soda purchases in bordering cities increased in Philadelphia and Oakland, and cross-price elasticity estimates suggest that diet soda, water, and snacks are substitutes. Household data confirms these shifts, showing increased purchases from discount stores. These findings indicate how consumer responses shape soda tax effectiveness, moderating its overall impact. The third chapter quantifies the welfare gains from the introduction of Greek yogurt using a random coefficients discrete choice model. Drawing on data from 2007 to 2019, the analysis shows that Greek yogurt initially appealed to higher-income, college-educated, and younger consumers, with significant heterogeneity in preferences in 2007. These demographic differences diminished over time as Greek yogurt became mainstream. Counterfactual analysis of removing Greek yogurt from consumer choice sets in 2011 and 2015 suggests sizable welfare losses. While losses are similar across income quartiles, they vary substantially by education: non-college-educated households experience much larger reductions in consumer surplus, indicating that they had come to rely more heavily on Greek yogurt despite not being the earliest adopters. The fourth chapter examines the impact of mergers between large beverage firms and small brands on product distribution. Using brand-level sales data and cross-market variation, the analysis finds that acquisitions significantly expand distribution: acquired brands become 23 percentage points more likely to be nationally distributed, and the number of markets in which they are sold increases by 233% on average. Effects vary by pre-merger brand characteristics and similarity to the acquirer’s portfolio.