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Estimating Coke's and Pepsi's Price and Advertising Strategies


  • Golan, Amos
  • Karp, Larry S
  • Perloff, Jeffrey M


A Semiparametric, information-based estimator is used to estimate strategies in prices and advertising for Coca-Cola and Pepsi-Cola. Separate strategies for each firm are estimated with and without restrictions from game theory. These information/entropy estimators are consistent and efficient. These estimates are used to test theories about the strategies of firms and to see how changes in incomes or factor prices affect these strategies.

Suggested Citation

  • Golan, Amos & Karp, Larry S & Perloff, Jeffrey M, 2000. "Estimating Coke's and Pepsi's Price and Advertising Strategies," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(4), pages 398-409, October.
  • Handle: RePEc:bes:jnlbes:v:18:y:2000:i:4:p:398-409

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    References listed on IDEAS

    1. Mark J. Roberts & Larry Samuelson, 1988. "An Empirical Analysis of Dynamic, Nonprice Competition in an Oligopolistic Industry," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 200-220, Summer.
    2. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, June.
    3. Gasmi, F & Laffont, J J & Vuong, Q, 1992. "Econometric Analysis of Collusive Behavior in a Soft-Drink Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 277-311, Summer.
    4. Gasmi, F. & Vuong, Q.H., 1988. "An Econometric Analysis Of Some Duopolistic Games In Prices And Advertising," Papers m8903, Southern California - Department of Economics.
    5. Karp, Larry S & Perloff, Jeffrey M, 1989. "Dynamic Oligopoly in the Rice Export Market," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 462-470, August.
    6. Gary M. Erickson, 1992. "Empirical Analysis of Closed-Loop Duopoly Advertising Strategies," Management Science, INFORMS, vol. 38(12), pages 1732-1749, December.
    7. Kooreman, Peter, 1994. "Estimation of Econometric Models of Some Discrete Games," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(3), pages 255-268, July-Sept.
    8. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
    9. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    10. Bresnahan, Timothy F. & Reiss, Peter C., 1991. "Empirical models of discrete games," Journal of Econometrics, Elsevier, vol. 48(1-2), pages 57-81.
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    Cited by:

    1. Wang, Yafeng & Graham, Brett, 2010. "Identification and Estimation of a Discrete Game by Observing its Correlated Equilibria," MPRA Paper 45656, University Library of Munich, Germany, revised 16 May 2011.
    2. Shinn-Shyr Wang & Kyle W. Stiegert & Tirtha P. Dhar, 2010. "Strategic Pricing Behavior under Asset Value Maximization," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(2), pages 151-170, June.
    3. Horrace, William C. & Huang, Rui & Perloff, Jeffrey M., 2016. "Effects of increased variety on demand, pricing, and welfare," Research in Economics, Elsevier, vol. 70(4), pages 569-587.
    4. Horrace, William & Huang, Rui & Perloff, Jeffrey, 2009. "Variety: Consumer Choice and Optimal Diversity," Research Reports 149942, University of Connecticut, Food Marketing Policy Center.
    5. Dhar, Tirtha & Chavas, Jean-Paul & Cotterill, Ronald W. & Gould, Brian W., 2002. "An Econometric Analysis of Brand Level Strategic Pricing Between Coca Cola and Pepsi Inc," Working Papers 201553, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    6. Wang, Yafeng & Graham, Brett, 2009. "Generalized Maximum Entropy estimation of discrete sequential move games of perfect information," MPRA Paper 21331, University Library of Munich, Germany.
    7. Steven S. Vickner & Stephen P. Davies, 2000. "Estimating strategic price response in a product-differentiated oligopoly: The case of a domestic canned fruit industry," Agribusiness, John Wiley & Sons, Ltd., vol. 16(2), pages 125-140.
    8. Enrico Ciavolino & Antonio Calcagnì, 2014. "A generalized maximum entropy (GME) approach for crisp-input/fuzzy-output regression model," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(6), pages 3401-3414, November.

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