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Empirical Analysis of Competitive Product Line Pricing Decisions: Lead, Follow, or Move Together?

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  • Kadiyali, Vrinda
  • Vilcassim, Naufel J
  • Chintagunta, Pradeep K

Abstract

Researchers have recently developed models for determining which market conduct best describes observed data. The authors apply these techniques from the 'new empirical industrial organization' literature to the competitive product line pricing decision, where a firm strategically prices its brands when determining the profit-maximizing conduct in the market. Demand, cost, and market structure are estimated endogenously. Empirical results from analyzing price competition in the laundry detergent market between Procter and Gamble selling Tide and EraPlus and Lever Brothers offering Wisk and Surf indicate that each firm positions its strong brand as a Stackelberg leader, with the rival's minor brand being the follower. Copyright 1996 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 69 (1996)
Issue (Month): 4 (October)
Pages: 459-87

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Handle: RePEc:ucp:jnlbus:v:69:y:1996:i:4:p:459-87

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Web page: http://www.journals.uchicago.edu/JB/

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Cited by:
  1. Abhik Roy & Jagmohan Raju, 2011. "The influence of demand factors on dynamic competitive pricing strategy: An empirical study," Marketing Letters, Springer, vol. 22(3), pages 259-281, September.
  2. Kostas Axarloglou, 2008. "Product line extensions: causes and effects," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 9-21.
  3. Cotterill, Ronald W. & Putsis, William P., Jr. & Dhar, Ravi, 2000. "Market Share and Price Setting Behavior For Private Labels and National Brands," Research Reports 25209, University of Connecticut, Food Marketing Policy Center.
  4. William P. Putsis, 1999. "Empirical analysis of competitive interaction in food product categories," Agribusiness, John Wiley & Sons, Ltd., vol. 15(3), pages 295-311.
  5. Richards, Timothy J. & Patterson, Paul M., 2006. "Firm-Level Competition in Price and Variety," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(03), December.
  6. Goddard, Ellen W. & Shank, Benjamin & Panter, Chris & Nilsson, Tomas K.H. & Cash, Sean B., 2007. "Canadian Chicken Industry: Consumer Preferences, Industry Structure and Producer Benefits from Investment in Research and Advertising," Project Report Series 52088, University of Alberta, Department of Resource Economics and Environmental Sociology.
  7. Dhar, Tirtha Pratim & Foltz, Jeremy D., 2004. "Is Soy Milk? The Economics Of The Soy Milk Market," 2004 Annual meeting, August 1-4, Denver, CO 20337, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Richards, Timothy J., 2004. "Price and Product-Line Rivalry Among Supermarket Retailers," Working Papers 28535, Arizona State University, Morrison School of Agribusiness and Resource Management.
  9. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer, vol. 17(1), pages 17-39, August.
  10. Kinwa-Muzinga, Annie & Mazzocco, Michael A., 2002. "Examining Price Paths Of A Portfolio Of Agro-Biotechnology Seeds: The Effects Of Competition And Farmers' Response," 2002 Annual meeting, July 28-31, Long Beach, CA 19829, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. Kinwa-Muzinga, Annie & Mazzocco, Michael A., 2000. "Preferred Price Paths Of Biotechnology-Derived Products: Time And Portfolio Affects," Proceedings:Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26031, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  12. Dhar, Tirtha Pratim & Chavas, Jean-Paul & Gould, Brian W., 2002. "An Empirical Assessment of Endogeneity Issues In Demand Analysis for Differentiated Products," Research Reports 25227, University of Connecticut, Food Marketing Policy Center.
  13. Dhar, Tirtha Pratim & Chavas, Jean-Paul & Cotterill, Ronald W. & Gould, Brian W., 2002. "An Econometric Analysis of Brand Level Strategic Pricing Between Coca Cola and Pepsi Inc," Research Reports 25231, University of Connecticut, Food Marketing Policy Center.
  14. Dhar, Tirtha Pratim & Foltz, Jeremy D., 2003. "Market Structure And Consumer Valuation In The Rbst-Free And Organic Milk Markets," 2003 Annual meeting, July 27-30, Montreal, Canada 22177, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  15. Cotterill, Ronald W., 2000. "Dynamic Explanations of Industry Structure and Performance," Research Reports 25224, University of Connecticut, Food Marketing Policy Center.
  16. Dhar, Tirtha Pratim & Cotterill, Ronald W., 2002. "Two-Stage Oligopoly Pricing With Differentiated Product: The Boston Fluid Milk Market," 2002 Annual meeting, July 28-31, Long Beach, CA 19872, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  17. Rojas, Christian, 2005. "Does the King Use Its Power? Price Competition in U.S. Brewing," Research Reports 25172, University of Connecticut, Food Marketing Policy Center.
  18. Putsis, William P., Jr., 1998. "Empirical Analysis of Competitive Interaction in Food Product Categories," Research Reports 25221, University of Connecticut, Food Marketing Policy Center.

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