Local identity and persistent leadership in market share dynamics: Evidence from deregulation in the Korean soju industry

摘要: This paper empirically documents signicant eects of past experiences on current purchases and investigates sources persistence in brand preferences. We use a rare natural experiment the Korean soju industry, which government abolished regulation that designated only one rm for each regional market further obliged consumers to purchase local brands. nd tend brands even after was removed. To explain persistent leadership rms their respective markets, we propose an identity-based story, implies (i) company is expected have highest share its market, (ii) migrants other regions consume products produced by region origin, (iii) any exogenous event triggers higher costs identity should lead market. In particular, consider regionalism politics, presidential election results as events might trigger costs. empirical evidence consistent with these three theoretical predictions, robust several alternative specications. various potential mechanisms are not fully our data, suggesting identity, once established, can be important source geographic variations shares.