IDEAS home Printed from https://ideas.repec.org/a/bla/randje/v47y2016i4p1029-1056.html
   My bibliography  Save this article

Push-me pull-you: comparative advertising in the OTC analgesics industry

Author

Listed:
  • Simon P. Anderson
  • Federico Ciliberto
  • Jura Liaukonyte
  • Régis Renault

Abstract

We model comparative advertising as brands pushing up own brand perception and pulling down the brand image of targeted rivals. We watched all TV advertisements for OTC analgesics 2001-2005 to construct matrices of rival targeting and estimate the structural model. These attack matrices identify diversion ratios and hence comparative advertising damage measures. We find that outgoing comparative advertising attacks are half as powerful as self-promotion in raising own perceived quality and cause more damage to the targeted rival than benefit to the advertiser. Comparative advertising causes most damage through the pull-down effect and has substantial benefits to other rivals.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Simon P. Anderson & Federico Ciliberto & Jura Liaukonyte & Régis Renault, 2016. "Push-me pull-you: comparative advertising in the OTC analgesics industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 1029-1056, November.
  • Handle: RePEc:bla:randje:v:47:y:2016:i:4:p:1029-1056
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/rand.2016.47.issue-4
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Emons, Winand & Fluet, Claude, 2012. "Non-comparative versus comparative advertising of quality," International Journal of Industrial Organization, Elsevier, vol. 30(4), pages 352-360.
    2. Gautam Gowrisankaran & Marc Rysman, 2012. "Dynamics of Consumer Demand for New Durable Goods," Journal of Political Economy, University of Chicago Press, vol. 120(6), pages 1173-1219.
    3. Pradeep Chintagunta & Renna Jiang & Ginger Jin, 2009. "Information, learning, and drug diffusion: The case of Cox-2 inhibitors," Quantitative Marketing and Economics (QME), Springer, vol. 7(4), pages 399-443, December.
    4. Eckard, E Woodrow, Jr, 1991. "Competition and the Cigarette TV Advertising Ban," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 119-133, January.
    5. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-450, June.
    6. Meghan Busse & Marc Rysman, 2005. "Competition and Price Discrimination in Yellow Pages Advertising," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 378-390, Summer.
    7. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
    8. Joel Waldfogel & Jeffrey Milyo, 1999. "The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart," American Economic Review, American Economic Association, vol. 89(5), pages 1081-1096, December.
    9. Toker Doganoglu & Daniel Klapper, 2006. "Goodwill and dynamic advertising strategies," Quantitative Marketing and Economics (QME), Springer, vol. 4(1), pages 5-29, March.
    10. 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.
    11. Massimo Motta, 2013. "Advertising bans," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(1), pages 61-81, March.
    12. Andrew T. Ching, 2010. "A Dynamic Oligopoly Structural Model For The Prescription Drug Market After Patent Expiration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1175-1207, November.
    13. Tülin Erdem & Michael P. Keane, 1996. "Decision-Making Under Uncertainty: Capturing Dynamic Brand Choice Processes in Turbulent Consumer Goods Markets," Marketing Science, INFORMS, vol. 15(1), pages 1-20.
    14. Simon P. Anderson & Régis Renault, 2009. "Comparative advertising: disclosing horizontal match information," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 558-581, September.
    15. Winand Emons & Claude Fluet, 2008. "Non-comparative versus Comparative Advertising as a Quality Signal," Diskussionsschriften dp0805, Universitaet Bern, Departement Volkswirtschaft.
    16. Gourieroux, Christian & Monfort, Alain & Renault, Eric & Trognon, Alain, 1987. "Generalised residuals," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 5-32.
    17. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    18. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
    19. Aviv Nevo, 2000. "Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 395-421, Autumn.
    20. F. Gasmi & J.J. Laffont & Q. Vuong, 1992. "Econometric Analysisof Collusive Behaviorin a Soft‐Drink Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 277-311, June.
    21. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    22. Andrew T. Ching & Robert Clark & Ignatius Horstmann & Hyunwoo Lim, 2016. "The Effects of Publicity on Demand: The Case of Anti-Cholesterol Drugs," Marketing Science, INFORMS, vol. 35(1), pages 158-181, January.
    23. Ulrich Doraszelski & Sarit Markovich, 2007. "Advertising dynamics and competitive advantage," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 557-592, September.
    24. Sass, Tim R & Saurman, David S, 1995. "Advertising Restrictions and Concentration: The Case of Malt Beverages," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 66-81, February.
    25. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    26. Harrington, Joseph Jr. & Hess, Gregory D., 1996. "A Spatial Theory of Positive and Negative Campaigning," Games and Economic Behavior, Elsevier, vol. 17(2), pages 209-229, December.
    27. Anderson, Simon P. & Ciliberto, Federico & Liaukonyte, Jura, 2013. "Information content of advertising: Empirical evidence from the OTC analgesic industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 355-367.
    28. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    29. Daniel A. Ackerberg, 2003. "Advertising, learning, and consumer choice in experience good markets: an empirical examination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1007-1040, August.
    30. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    31. repec:dau:papers:123456789/12478 is not listed on IDEAS
    32. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    33. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    34. Gasmi, Farid & Laffont, Jean-Jacques & Vuong, Quang, 1992. "Econometric Analysis of Collusive Behavior in a Soft Drink Market," IDEI Working Papers 16, Institut d'Économie Industrielle (IDEI), Toulouse.
    35. Jean-Pierre Dubé & Günter Hitsch & Puneet Manchanda, 2005. "An Empirical Model of Advertising Dynamics," Quantitative Marketing and Economics (QME), Springer, vol. 3(2), pages 107-144, June.
    36. Justin P. Johnson & David P. Myatt, 2006. "On the Simple Economics of Advertising, Marketing, and Product Design," American Economic Review, American Economic Association, vol. 96(3), pages 756-784, June.
    37. Ackerberg, Daniel A, 2001. "Empirically Distinguishing Informative and Prestige Effects of Advertising," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 316-333, Summer.
    38. Sonia Jaffe & E. Glen Weyl, 2013. "The First-Order Approach to Merger Analysis," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 188-218, November.
    39. Bresnahan, Timothy F, 1987. "Competition and Collusion in the American Automobile Industry: The 1955 Price War," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 457-482, June.
    40. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    41. Grabowski, Henry G & Vernon, John M, 1992. "Brand Loyalty, Entry, and Price Competition in Pharmaceuticals after the 1984 Drug Act," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 331-350, October.
    42. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dubois, Pierre & Griffith, Rachel & O'Connell, Martin, 2014. "The Effects of Banning Advertising on Demand, Supply and Welfare: Structural Estimation on a Junk Food Market," TSE Working Papers 14-485, Toulouse School of Economics (TSE).
    2. Alexander E. Saak, 2012. "Dynamic Informative Advertising of New Experience Goods," Journal of Industrial Economics, Wiley Blackwell, vol. 60(1), pages 104-135, March.
    3. Murry, Charles, 2018. "The effect of retail competition on relationship-specific investments: evidence from new car advertising," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 253-281.
    4. Anderson, Simon & Ciliberto, Federico & Liaukonyte, Jura, 2010. "Getting into Your Head(Ache): The Information Content of Advertising in the Over-the-Counter Analgesics Industry," MPRA Paper 24916, University Library of Munich, Germany.
    5. Anderson, Simon P. & Ciliberto, Federico & Liaukonyte, Jura, 2013. "Information content of advertising: Empirical evidence from the OTC analgesic industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 355-367.
    6. Bambauer-Sachse, Silke & Heinzle, Priska, 2018. "Comparative advertising for goods versus services: Effects of different types of product attributes through consumer reactance and activation on consumer response," Journal of Retailing and Consumer Services, Elsevier, vol. 44(C), pages 82-90.
    7. Maria Alipranti & Evangelos Mitrokostas & Emmanuel Petrakis, 2013. "Comparative versus Informative Advertising in Oligopolistic Markets," Working Papers 1301, University of Crete, Department of Economics.
    8. Parisa Pourkarimi & Gamal Atallah, 2020. "The Impact of Cooperative R&D and Advertising on Innovation and Welfare," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(1), pages 143-167, March.
    9. Barton, Jared & Castillo, Marco & Petrie, Ragan, 2016. "Negative campaigning, fundraising, and voter turnout: A field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 121(C), pages 99-113.
    10. Maria Alipranti & Emmanuel Petrakis, 2013. "Comparative Advertising in Markets with Network Externalities," Working Papers 1306, University of Crete, Department of Economics.
    11. Cao, Sean Shun & Fang, Vivian W. & (Gillian) Lei, Lijun, 2021. "Negative peer disclosure," Journal of Financial Economics, Elsevier, vol. 140(3), pages 815-837.
    12. Alipranti, Maria & Mitrokostas, Evangelos & Petrakis, Emmanuel, 2016. "Non-comparative and comparative advertising in oligopolistic markets," DICE Discussion Papers 231, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    13. Kurt P. Munz & Minah H. Jung & Adam L. Alter, 2020. "Name Similarity Encourages Generosity: A Field Experiment in Email Personalization," Marketing Science, INFORMS, vol. 39(6), pages 1071-1091, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dubois, Pierre & Griffith, Rachel & O'Connell, Martin, 2014. "The Effects of Banning Advertising on Demand, Supply and Welfare: Structural Estimation on a Junk Food Market," CEPR Discussion Papers 9942, C.E.P.R. Discussion Papers.
    2. Guofang Huang & Matthew Shum & Wei Tan, 2019. "Is pharmaceutical detailing informative? Evidence from contraindicated drug prescriptions," Quantitative Marketing and Economics (QME), Springer, vol. 17(2), pages 135-160, June.
    3. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    4. Ulrich Doraszelski & Sarit Markovich, 2007. "Advertising dynamics and competitive advantage," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 557-592, September.
    5. Duncan Simester & Yu (Jeffrey) Hu & Erik Brynjolfsson & Eric T. Anderson, 2009. "Dynamics Of Retail Advertising: Evidence From A Field Experiment," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 482-499, July.
    6. Chan, Tat Y. & Narasimhan, Chakravarthi & Yoon, Yeujun, 2017. "Advertising and price competition in a manufacturer-retailer channel," International Journal of Research in Marketing, Elsevier, vol. 34(3), pages 694-716.
    7. C. Robert Clark, 2007. "Advertising Restrictions and Competition in the Children’s Breakfast Cereal Industry," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 757-780.
    8. Michael Cohen & Adam Rabinowitz, 2012. "An Empirical Analysis of Equilibrium Pricing and Advertising in the Ready-To-Eat Cereal Market," Working Papers 15, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    9. Victor Aguirregabiria & Margaret Slade, 2017. "Empirical models of firms and industries," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1445-1488, December.
    10. Anderson, Simon P. & Ciliberto, Federico & Liaukonyte, Jura, 2013. "Information content of advertising: Empirical evidence from the OTC analgesic industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 355-367.
    11. Régis Chenavaz & Sajjad M. Jasimuddin, 2017. "An analytical model of the relationship between product quality and advertising," Post-Print hal-01685892, HAL.
    12. Rauch, Ferdinand, 2013. "Advertising expenditure and consumer prices," International Journal of Industrial Organization, Elsevier, vol. 31(4), pages 331-341.
    13. Laurent Cavenaile & Pau Roldan-Blanco, 2021. "Advertising, Innovation, and Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(3), pages 251-303, July.
    14. Richard Schmalensee, 2012. "“On a Level with Dentists?” Reflections on the Evolution of Industrial Organization," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(3), pages 157-179, November.
    15. Salvatore Piccolo & Piero Tedeschi & Giovanni Ursino, 2018. "Deceptive Advertising with Rational Buyers," Management Science, INFORMS, vol. 64(3), pages 1291-1310, March.
    16. Wang, Shinn-Shyr & Stiegert, Kyle W., 2006. "The Duopolistic Firm with Endogenous Risk Control: Case of Persuasive Advertising and Product Differentiation," Staff Paper Series 496, University of Wisconsin, Agricultural and Applied Economics.
    17. Pierre Dubois & Rachel Griffith & Martin O’Connell, 2018. "The Effects of Banning Advertising in Junk Food Markets," Review of Economic Studies, Oxford University Press, vol. 85(1), pages 396-436.
    18. Pradeep Chintagunta & Tülin Erdem & Peter E. Rossi & Michel Wedel, 2006. "Structural Modeling in Marketing: Review and Assessment," Marketing Science, INFORMS, vol. 25(6), pages 604-616, 11-12.
    19. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    20. Draganska, Michaela & Klapper, Daniel, 2010. "Choice Set Heterogeneity and the Role of Advertising: An Analysis with Micro and Macro Data," Research Papers 2063, Stanford University, Graduate School of Business.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:randje:v:47:y:2016:i:4:p:1029-1056. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/randdus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/randdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.