Some Empirical Regularities in Market Shares
Coauthor(s): Raaj Sah.
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We present some empirical regularities in the market shares of brands. Our cross-sectional data on market shares consists of 1171 brands in 91 product categories of foods and sporting goods sold in the US. One of our results is that the pattern of market shares for each of the categories (many of which are fundamentally dissimilar, such as breakfast cereals and rifles) is represented well by the power law. The power law also does better than an alternative model, namely, the exponential form, which has previously been studied in the literature but without having been compared to any alternative. These two
models have sharply different implications; for example, the power law predicts that the ratio of market shares for two successively ranked brands becomes smaller as one progresses from higher-ranked to lower-ranked brands, whereas the exponential form predicts that this ratio is a constant. Our findings have several managerial and research implications, which we summarize.
Source: Management Science
Kohli, Rajeev, and Raaj Sah. "Market Shares: Some Regularities." Management Science 52, no. 11 (2006): 1792-1798.