Optimal Brand and Generic Advertising Policies in a Dynamic Differentiated Product Oligopoly
In some product categories, generic advertising is used to increase market demand of the category and at the same time brand advertising is used to entice consumers to choose the advertised brand over competing brands. This paper empirically investigates the optimal levels of brand and generic advertising in a dynamic differentiated product oligopoly. A nested logit demand system incorporating brand and generic advertising goodwill stocks is specified and estimated without imposing any supply-side restrictions. Demand side parameters are then used to calibrate a dynamic game of brand and generic advertising that takes into account the vertical relationship between manufacturers and retailers. Estimates from the fluid milk product category indicate that brand advertising is effective for increasing brand level demand and generic advertising has a differential effect on individual brands. On the supply side, we found that it is not optimal for brand manufacturers to advertise in the presence of generic advertising.
|Date of creation:||Mar 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (860) 486-2836
Fax: (860) 486-1932
Web page: http://www.fmpc.uconn.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ariel Pakes & Paul McGuire, 1992.
"Computing Markov Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model,"
NBER Technical Working Papers
0119, National Bureau of Economic Research, Inc.
- Ariel Pakes & Paul McGuire, 1994. "Computing Markov-Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 555-589, Winter.
- Ariel Pakes & Paul McGuire, 1992. "Computing Markov perfect Nash equilibria: numerical implications of a dynamic differentiated product model," Discussion Paper / Institute for Empirical Macroeconomics 58, Federal Reserve Bank of Minneapolis.
- Ulrich Doraszelski & Sarit Markovich, 2007. "Advertising dynamics and competitive advantage," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 557-592, 09.
- Philip R. Vande Kamp & Harry M. Kaiser, 2000.
"Optimal Temporal Policies in Fluid Milk Advertising,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 82(2), pages 274-286.
- Vande Kamp, Philip R. & Kaiser, Harry M., 1998. "Optimal Temporal Policies in Fluid Milk Advertising," Research Bulletins 122676, Cornell University, Department of Applied Economics and Management.
- Philip R. Vande Kamp & Harry M. Kaiser, 1999. "Irreversibility in Advertising-Demand Response Functions: An Application to Milk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 385-396.
- Kinnucan, Henry W., 1986. "Demographic Versus Media Advertising Effects On Milk Demand: The Case Of The New York City Market," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 15(1), April.
- C. Lanier Benkard, 2004. "A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft," Review of Economic Studies, Oxford University Press, vol. 71(3), pages 581-611.
- Sofia Berto Villas-Boas, 2007.
"Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data,"
Review of Economic Studies,
Oxford University Press, vol. 74(2), pages 625-652.
- Villas-Boas, Sofia B., 2007. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6gz1t778, Department of Agricultural & Resource Economics, UC Berkeley.
- Villas-Boas, Sofia B., 2006. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0z26d2v9, Department of Agricultural & Resource Economics, UC Berkeley.
- 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.
- Chakravarti, Amitav & Janiszewski, Chris, 2004. " The Influence of Generic Advertising on Brand Preferences," Journal of Consumer Research, University of Chicago Press, vol. 30(4), pages 487-502, March.
- Jonq-Ying Lee & Mark G. Brown, 1992. "Lag structures in commodity advertising research," Agribusiness, John Wiley & Sons, Ltd., vol. 8(2), pages 143-154.
- Mario J. Miranda & Paul L. Fackler, 2004. "Applied Computational Economics and Finance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633094, June.
- Frank M. Bass & Anand Krishnamoorthy & Ashutosh Prasad & Suresh P. Sethi, 2005. "Generic and Brand Advertising Strategies in a Dynamic Duopoly," Marketing Science, INFORMS, vol. 24(4), pages 556-568, February.
- Gary M. Erickson, 1992. "Empirical Analysis of Closed-Loop Duopoly Advertising Strategies," Management Science, INFORMS, vol. 38(12), pages 1732-1749, December.
- Blisard, Noel & Blayney, Donald P. & Chandran, Ram & Allshouse, Jane E., 1999. "Analyses of Generic Dairy Advertising, 1984-97," Technical Bulletins 33554, United States Department of Agriculture, Economic Research Service.
- Pakes, Ariel & McGuire, Paul, 2001. "Stochastic Algorithms, Symmetric Markov Perfect Equilibrium, and the 'Curse' of Dimensionality," Econometrica, Econometric Society, vol. 69(5), pages 1261-81, September.
- Eugene Jones & Ronald W. Ward, 1989. "Effectiveness of generic and brand advertising on fresh and processed potato products," Agribusiness, John Wiley & Sons, Ltd., vol. 5(5), pages 523-536.
- Pradeep K. Chintagunta & Naufel J. Vilcassim, 1992. "An Empirical Investigation of Advertising Strategies in a Dynamic Duopoly," Management Science, INFORMS, vol. 38(9), pages 1230-1244, September.
- John Crespi & Stéphan Marette, 2002. "Generic Advertising and Product Differentiation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 691-701.
- M. Espinosa & Petr Mariel, 2001. "A model of optimal advertising expenditures in a dynamic duopoly," Atlantic Economic Journal, International Atlantic Economic Society, vol. 29(2), pages 135-161, June.
- J. Miguel Villas-Boas & Russell S. Winer, 1999. "Endogeneity in Brand Choice Models," Management Science, INFORMS, vol. 45(10), pages 1324-1338, October.
- Jean-Pierre Dubé & Günter Hitsch & Puneet Manchanda, 2005. "An Empirical Model of Advertising Dynamics," Quantitative Marketing and Economics, Springer, vol. 3(2), pages 107-144, June.
- Pradeep K. Chintagunta, 1993. "Investigating the Sensitivity of Equilibrium Profits to Advertising Dynamics and Competitive Effects," Management Science, INFORMS, vol. 39(9), pages 1146-1162, September.
- Chintagunta, Pradeep K & Jain, Dipak C, 1995. "Empirical Analysis of a Dynamic Duopoly Model of Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(1), pages 109-31, Spring.
- Sorger, Gerhard, 1989. "Competitive dynamic advertising : A modification of the Case game," Journal of Economic Dynamics and Control, Elsevier, vol. 13(1), pages 55-80, January.
- Forker, Olan D. & Liu, Donald J., 1989. "Generic Dairy Promotion Economic Research: Past, Present, and Future," Staff Papers 197587, Cornell University, Department of Applied Economics and Management.
When requesting a correction, please mention this item's handle: RePEc:ags:uconnr:149978. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.