A Simultaneous Equations Model of Coffee Brand Pricing and Advertising
AbstractThis paper explores the relationship between a differentiated brand's market share and its price in the context of a model that recognizes the endogeneity of the brand's advertising behavior and pricing decisions. The empirical analysis suggests that General Foods charged higher prices for its regular-grind Maxwell House coffee in geographic areas where the brand's market share was relatively large. Available cross-sectional, time-series data and company documents suggest that this empirical relationship is attributable to the preference grocery retailers have for putting dominant coffee brands on special, rather than cross-sectional variations in costs, market concentration, or consumer tastes. Copyright 1992 by MIT Press.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics & Statistics.
Volume (Year): 74 (1992)
Issue (Month): 1 (February)
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- Peter E. Rossi & Judith A. Chevalier & Anil K. Kashyap, 2002.
"Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data,"
Yale School of Management Working Papers
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- Robert DeYoung & Evren Örs, 2004. "Advertising and pricing at multiple-output firms: evidence from U.S. thrift institutions," Working Paper Series WP-04-25, Federal Reserve Bank of Chicago.
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- Requena-Silvente, Francisco & Walker, James, 2007. "Investigating sales and advertising rivalry in the UK multipurpose vehicle market (1995-2002)," Journal of Economics and Business, Elsevier, vol. 59(2), pages 163-180.
- Peter Scott & James Walker, 2010. "Sales and Advertising Rivalry in Interwar US Department Stores," Economics & Management Discussion Papers em-dp2009-05, Henley Business School, Reading University.
- Haller, Lawrence E. & Cotterill, Ronald W., 1996. "Evaluating Traditional Share-Price and Residual Demand Measures of Market Power in the Catsup Industry," Research Reports 25193, University of Connecticut, Food Marketing Policy Center.
- Cotterill, Ronald W. & Harper, C. David, 1994. "Market Power and the Demsetz Quality Critique: An Evaluation for Food Retailing," Research Reports 25185, University of Connecticut, Food Marketing Policy Center.
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