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Spillovers in Attribute Advertising

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  • Schmeiser Steven

    (Department of Economics, Mount Holyoke College, 50 College Street, South Hadley, MA 01075, United States of America)

Abstract

When firms advertise a vertically differentiated product attribute, they increase the weight consumers put on that attribute. This creates a spillover effect as one firm’s advertising can increase demand for other firms that also have the attribute. I develop a market share attraction model and find that as spillover increases, firms advertise less. Profit can be increasing or decreasing in spillover depending on the particular industry environment. Spillover lends a “public good” quality to advertising and firms free-ride in equilibrium. An advertising ban has an ambiguous effect on the profits of firms with the attribute, but always increases profits of firms without the attribute.

Suggested Citation

  • Schmeiser Steven, 2016. "Spillovers in Attribute Advertising," Review of Marketing Science, De Gruyter, vol. 14(1), pages 69-87, June.
    • Handle: RePEc:bpj:revmkt:v:14:y:2016:i:1:p:69-87:n:2
    DOI: 10.1515/roms-2014-0020
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    References listed on IDEAS

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    Cited by:

    1. Zhu, Chen & Lopez, Rigoberto A. & Liu, Xiaoou, 2019. "Consumer responses to front-of-package labeling in the presence of information spillovers," Food Policy, Elsevier, vol. 86(C), pages 1-1.

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