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Generic and Brand Advertising in Markets with Product Differentiation

Author

Listed:
  • Isariyawongse Kosin

    (Oregon State University)

  • Kudo Yasushi

    (Oregon State University)

  • Tremblay Victor J.

    (Oregon State University)

Abstract

In this paper, we analyze how generic advertising affects brand advertising and firm profits in differentiated oligopoly markets. We show that in the Crespi (2007) model only the high quality firm will use brand advertising when differentiation is vertical. We also demonstrate that when differentiation is horizontal, the equilibrium is likely to be more symmetric in terms of firm profits, spending on brand advertising, and firm response to generic advertising. Finally, we point out that generic advertising will increase expenditures on brand advertising when firms play a supermodular game. The results confirm that there are many reasons why generic advertising may increase firm spending on brand advertising.

Suggested Citation

  • Isariyawongse Kosin & Kudo Yasushi & Tremblay Victor J., 2007. "Generic and Brand Advertising in Markets with Product Differentiation," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-17, September.
    • Handle: RePEc:bpj:bjafio:v:5:y:2007:i:1:n:6
    DOI: 10.2202/1542-0485.1179
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    Cited by:

    1. Suh, Daeseok & Chung, Chanjin, 2009. "Does Generic Advertising Help or Hurt Brand Advertising?," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49557, Agricultural and Applied Economics Association.
    2. Roma Paolo & Perrone Giovanni, 2010. "Generic Advertising, Brand Advertising and Price Competition: An Analysis of Free-Riding Effects and Coordination Mechanisms," Review of Marketing Science, De Gruyter, vol. 8(1), pages 1-29, October.

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