In Simple Words
Imagine ten bakeries in a small town with a fixed total daily demand for bread. If a consultant teaches one bakery how to run aggressive sales promotions, that bakery may temporarily win customers away from the other nine bakeries without increasing the town's total bread consumption. This represents "business stealing" (a zero-sum transfer). In contrast, if the bakery learns to improve bread quality or lower production costs, it expands overall consumer welfare and market value.
Research question
Enterprise development evaluations often focus on firm-level outputs without evaluating general equilibrium effects, failing to distinguish whether marketing advice generates genuine welfare improvements or merely redistributes market share from non-treated competitors.
Participants
Theoretical framework applied to 160 urban microenterprise tailors operating in competitive local markets in Accra, Ghana.
Study Design
Conceptual general equilibrium market structure analysis comparing persuasive marketing interventions against informative/quality-enhancing process innovations in microenterprise clusters.
Results
In competitive market equilibrium with fixed aggregate consumer demand, persuasive marketing instruction primarily reallocates revenue across rival microenterprises (generating negative externalities for non-treated firms), whereas true industry-wide productivity growth requires cost reductions, product quality enhancements, or product differentiation.
Takeaway
Account for local market competitiveness and potential zero-sum business stealing when designing and evaluating microenterprise marketing support programs.