Unilever and economic power : a study of the market for margarine in the United Kingdom

This analysis of the margarine industry in the presence of Unilever, identifies and examines the economic issues of structure, behaviour and performance, against a background of policy issues related to international trade, concentration and nutrition. The major divisions of the thesis are (i) the political and international trade issues (ii) propaganda and advertising (iii) the nutrition problem (iv) margarine demand (v) the degree of monopoly in the margarine industry (vi) Government White Papers and multinational corporate activity.' An attempt is made, both by descriptive and empirical treatment of the subject matter, to demonstrate the danger inherent in the oligopolistic manipulation of consumer demand and public opinion by propaganda and advertising, and to consider the evidence of resource wasteage. Empirical work, mainly be using techniques of multivariate regression analysis, tests issues in the nutrition problem and also estimates aggregate demand functions for margarine as well as estimating the change in performance due to changing structure and performance. Attention is also paid to the influence of oligopolistic price adjustment in the macroeconomic problem of inflation. The main thrust lies in the direction of considering adjustment problems in time series data. In demand estimation it is shown by allowing for quality variation and by allowing the influence of advertising to build up over time, that whilst aggregate demand for margarine appears to remain uninfluenced by advertising expenditure, substantially higher values are obtained than are usual for own price elasticity. In relation to the performance issue, the results indicate a more rapid adjustment to changes in the aggregate advertising variable than are usually obtained. Results are also reported which suggest that price adjustment to cost changes are rapid, and this is attributed to the structure of margarine production. Apart from technical issues the main conclusions are that the nutrition controversy is being influenced unduly by propaganda and that independently of this, resource wasteage by the margarine oligopoly would be reduced by an increase in competition, and by the control of advertising. Again it is suggested gains, in relation to the problem of UK self sufficiency and in relation to the problem of inflation, could be expected following an increase in competition. The benefits of the control of costs as well as prices are considered as an alternative policy measure