Estimating Demand for Differentiated Products: The Case of Beer in the U.S
AbstractThis paper employs a nation-wide sample of supermarket scanner data to estimate a large brandlevel demand system for beer in the U.S. Unlike previous studies, this work estimates the ownand cross-advertising elasticities in addition to price elasticities. The dimensionality problem is solved with the Distance Metric method of Pinkse, Slade and Brett and the demand model follows the flexible Almost Ideal demand system. While price elasticities are consistent with previous results, positive and negative cross-advertising elasticities imply the presence of both cooperative and predatory effects of advertising expenditures across brands; however, the former effect appears to dominate suggesting that advertising increases the overall demand for beer.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Food Marketing Policy Center Research Reports with number 089.
Length: 39 pages
Date of creation: Oct 2005
Date of revision:
Demand; differentiated products; distance metric; Almost Ideal Demand System; advertising; beer;
Other versions of this item:
- Rojas, Christian & Peterson, Everett, 2005. "Estimating Demand for Differentiated Products: The Case of Beer in the U.S," Research Reports 149023, University of Connecticut, Food Marketing Policy Center.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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IDEI Working Papers
16, Institut d'Économie Industrielle (IDEI), Toulouse.
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- Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, vol. 70(3), pages 1111-1153, May.
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- Moschini, GianCarlo, 1995. "Units of Measurement and the 'Stone Index' In Demand System Estimation," Staff General Research Papers 5058, Iowa State University, Department of Economics.
- Jon Nelson, 2005. "Beer Advertising and Marketing Update: Structure, Conduct, and Social Costs," Review of Industrial Organization, Springer, vol. 26(3), pages 269-306, December.
- Jon P. Nelson, 1999. "Broadcast Advertising and U.S. Demand for Alcoholic Beverages," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 774-790, April.
- Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
- Rojas, Christian, 2005. "Market Power and Price Competition in U.S. Brewing," Research Reports 149024, University of Connecticut, Food Marketing Policy Center.
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