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Advertising, Random Sales Response, and Brand Competition: Some Theoretical and Econometric Implications

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  • Nguyen, Dung

Abstract

This paper examines implications for the firm's advertising decisions under conditions of random sales response to advertising within the context of multibrand competition. The competitive environment assumed is characterized not only by interactions among different companies within a given industry, but also by inter- actions among different brands produced by a single company. A theoretical model is first formulated to examine the effect of uncertainty in the sales-advertising relations and that of the firm's attitude toward risk on its advertising. The theoretical results are then assessed by estimating an econometric model using the cigarette data. Copyright 1987 by the University of Chicago.

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  • Nguyen, Dung, 1987. "Advertising, Random Sales Response, and Brand Competition: Some Theoretical and Econometric Implications," The Journal of Business, University of Chicago Press, vol. 60(2), pages 259-279, April.
    • Handle: RePEc:ucp:jnlbus:v:60:y:1987:i:2:p:259-79
    DOI: 10.1086/296395
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    Cited by:

    1. Nejadmalayeri, Ali & Mathur, Ike & Singh, Manohar, 2013. "Product market advertising and corporate bonds," Journal of Corporate Finance, Elsevier, vol. 19(C), pages 78-94.
    2. Steffen Huck & Kai A. Konrad & Wieland Müller, 2002. "Merger and Collusion in Contests," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 563-575, December.
    3. Mesak, Hani I., 1999. "On the generalizability of advertising pulsation monopoly results to an oligopoly," European Journal of Operational Research, Elsevier, vol. 117(3), pages 429-449, September.

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