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The Evolution of Brand Preferences: Evidence from Consumer Migration

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  • Bart J. Bronnenberg
  • Jean-Pierre H. Dube
  • Matthew Gentzkow

Abstract

We study the long-run evolution of brand preferences, using new data on consumers' life histories and purchases of consumer packaged goods. Variation in where consumers have lived in the past allows us to isolate the causal effect of past experiences on current purchases, holding constant contemporaneous supply-side factors such as availability, prices, and advertising. Heterogeneity in brand preferences explains 40 percent of geographic variation in market shares. These preferences develop endogenously as a function of consumers' life histories and are highly persistent once formed, with experiences 50 years in the past still exerting a significant effect on current consumption. Counterfactuals suggest that brand preferences create large entry barriers and durable advantages for incumbent firms, and can explain persistence of early-mover advantage over long periods. Variation across product categories shows that the persistence of brand preferences is related in an intuitive way to both advertising levels and the social visibility of consumption.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16267.

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Date of creation: Aug 2010
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Publication status: published as With Bart Bronnenberg and Matt Gentzkow, "The Evolution of Brand Preferences: Evidence from Consumer Migration," American Economic Review (forthcoming).
Handle: RePEc:nbr:nberwo:16267

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  1. John Haltiwanger & Chad Syverson & Lucia Foster, 2010. "The Slow Growth of New Plants: Learning about Demand?," 2010 Meeting Papers 106, Society for Economic Dynamics.
  2. James J. Heckman & James M. Snyder, Jr., 1996. "Linear Probability Models of the Demand for Attributes with an Empirical Application to Estimating the Preferences of Legislators," NBER Working Papers 5785, National Bureau of Economic Research, Inc.
  3. David Atkin, 2010. "Trade, tastes and Nutrition in India," Working Papers 986, Economic Growth Center, Yale University.
  4. Luttmer, Erzo F. P. & Singhal, Monica, 2008. "Culture, Context, and the Taste for Redistribution," Working Paper Series rwp08-038, Harvard University, John F. Kennedy School of Government.
  5. Liran Einav & Ephraim Leibtag & Aviv Nevo, 2010. "Recording discrepancies in Nielsen Homescan data: Are they present and do they matter?," Quantitative Marketing and Economics, Springer, vol. 8(2), pages 207-239, June.
  6. Davina C. Ling & Ernst R. Berndt & Margaret K. Kyle, 2002. "Deregulating Direct-to-Consumer Marketing of Prescription Drugs: Effects on Prescription and Over-the-Counter Product Sales," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 691-723.
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Cited by:
  1. Craig L. Garthwaite, 2012. "You Get a Book! Demand Spillovers, Combative Advertising, and Celebrity Endorsements," NBER Working Papers 17915, National Bureau of Economic Research, Inc.
  2. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.
  3. Atkin, David, 2013. "The Caloric Costs of Culture: Evidence from Indian Migrants," Working Papers 164697, American Association of Wine Economists.
  4. Keith Head & Thierry Mayer, 2013. "What separates us? Sources of resistance to globalization," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1196-1231, November.
  5. Bratti, Massimiliano & De Benedictis, Luca & Santoni, Gianluca, 2012. "On the Pro-Trade Effects of Immigrants," IZA Discussion Papers 6628, Institute for the Study of Labor (IZA).
  6. David Atkin, 2013. "The Caloric Costs of Culture: Evidence from Indian Migrants," NBER Working Papers 19196, National Bureau of Economic Research, Inc.
  7. Bart J. Bronnenberg & Jean-Pierre H. Dube & Matthew Gentzkow, 2012. "The Evolution of Brand Preferences: Evidence from Consumer Migration," American Economic Review, American Economic Association, vol. 102(6), pages 2472-2508, October.
  8. Michael Good, 2012. "How Localized is the Pro-trade Effect of Immigration? Evidence from Mexico and the United States," Working Papers 1203, Florida International University, Department of Economics.
  9. Bursztyn, Leonardo & Cantoni, Davide, 2012. "A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior," Discussion Papers in Economics 13949, University of Munich, Department of Economics.
  10. Soren T. Anderson & Ryan Kellogg & Ashley Langer & James M. Sallee, 2013. "The Intergenerational Transmission of Automobile Brand Preferences: Empirical Evidence and Implications for Firm Strategy," NBER Working Papers 19535, National Bureau of Economic Research, Inc.
  11. Costa-Font, Joan & Rudisill, Caroline & Tan, Stefanie, 2014. "Brand loyalty, patients and limited generic medicines uptake," Health Policy, Elsevier, vol. 116(2), pages 224-233.

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