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Estimating Demand for Differentiated Products: The Case of Beer in the U.S

Author

Listed:
  • Christian Rojas

    (University of Massachusetts)

  • Everett B. Peterson

    (Virginia Tech)

Abstract

This 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.

Suggested Citation

  • Christian Rojas & Everett B. Peterson, 2005. "Estimating Demand for Differentiated Products: The Case of Beer in the U.S," Food Marketing Policy Center Research Reports 089, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:zwi:fpcrep:089
    as

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    File URL: http://fmpc.uconn.edu/publications/rr/rr89.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. 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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    More about this item

    Keywords

    Demand; differentiated products; distance metric; Almost Ideal Demand System; advertising; beer;
    All these keywords.

    JEL classification:

    • 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; Personnel Economics - - Marketing and Advertising - - - Advertising

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