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The Role of Retail Prices and Promotions in Determining Cigarette Brand Market Shares

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  • John Tauras
  • Richard Peck

    ()

  • Frank Chaloupka

Abstract

Over the past two decades, two forms of price competition have emerged within the cigarette industry: the introduction and spread of discount and deep discount cigarettes and the increased use of price-related promotions. In this paper, we use quarterly market-level, scanner-based data on cigarette prices, promotions, and sales for 50 US markets over the period from 1994-IV through 2002-II to examine the impact of price and promotions on market shares for premium, discount, and deep discount brand cigarettes. Our estimates indicate that changes in relative prices, including those resulting from promotions, account for much of observed changes in market shares. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11151-006-0016-6
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 28 (2006)
Issue (Month): 3 (05)
Pages: 253-284

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Handle: RePEc:kap:revind:v:28:y:2006:i:3:p:253-284

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: brand choice; cigarettes; master settlement agreement; premium; discount and deep discount brands; price and promotion; JEL classification; L1; L66; M30;

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  1. Bulow, J. & Klemperer, P., 1999. "The Tobacco Deal," Economics Papers 1999-w11, Economics Group, Nuffield College, University of Oxford.
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Cited by:
  1. Pham, Vivienne & Prentice, David, 2010. "An empirical analysis of the counterfactual: a merger and divestiture in the Australian cigarette industry," MPRA Paper 26713, University Library of Munich, Germany.
  2. Vivienne Pham & David Prentice, 2013. "A Random Coefficients Logit Analysis of the Counterfactual: A Merger and Divestiture in the Australian Cigarette Industry," Working Papers 2013.04, School of Economics, La Trobe University.
  3. Natsuko Iwasaki & Victor Tremblay, 2009. "The effect of marketing regulations on efficiency: LeChatelier versus coordination effects," Journal of Productivity Analysis, Springer, vol. 32(1), pages 41-54, August.

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