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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, Society for Economic Dynamics 128, Society for Economic Dynamics.
  2. David Atkin, 2013. "Trade, Tastes, and Nutrition in India," American Economic Review, American Economic Association, American Economic Association, vol. 103(5), pages 1629-63, August.
  3. Luttmer, Erzo F. P. & Singhal, Monica, 2008. "Culture, Context, and the Taste for Redistribution," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp08-038, Harvard University, John F. Kennedy School of Government.
  4. 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.
  5. 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, University of Chicago Press, vol. 45(S2), pages 691-723.
  6. 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, Springer, vol. 8(2), pages 207-239, June.
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Cited by:
  1. Atkin, David, 2013. "The Caloric Costs of Culture: Evidence from Indian Migrants," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9542, C.E.P.R. Discussion Papers.
  2. Keith Head & Thierry Mayer, 2013. "What Separates Us? Sources of Resistance to Globalization," Working Papers 2013-26, CEPII research center.
  3. Costa-Font, Joan & Rudisill, Caroline & Tan, Stefanie, 2014. "Brand loyalty, patients and limited generic medicines uptake," Health Policy, Elsevier, Elsevier, vol. 116(2), pages 224-233.
  4. Bursztyn, Leonardo & Cantoni, Davide, 2012. "A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9101, C.E.P.R. Discussion Papers.
  5. 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, American Economic Association, vol. 102(6), pages 2472-2508, October.
  6. 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.
  7. Massimiliano Bratti & Luca De Benedictis & Gianluca Santoni, 2013. "On the pro-trade effects of immigrants," Working Papers CEB, ULB -- Universite Libre de Bruxelles 13-014, ULB -- Universite Libre de Bruxelles.
  8. Fabrizio Germano & Martin Meier, 2010. "Concentration and self-censorship in commercial media," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1256, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Michael Good, 2012. "How Localized is the Pro-trade Effect of Immigration? Evidence from Mexico and the United States," Working Papers, Florida International University, Department of Economics 1203, Florida International University, Department of Economics.
  10. 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.

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