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How Brand Names Affect the Price Setting of Carmakers Producing Twin Cars?

  • Nora Lado
  • Omar Licandro
  • Francisco Pérez Bermejo

In the automobile sector, it is a usual practice that independent carmakers engage in the development and production of a common car model, the so-called twin-cars. From the point of view of the marketing literature, we claim that carmakers should not charge different brand premia on separate models of a twin car. We use hedonic regressions and panel data estimators to valuate brand premia, by controlling for quality diversity. We find that there are no significant differences between brand premia of separate models of a twin car, even if brand premia may differ across different carmakers.

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Paper provided by FEDEA in its series Working Papers with number 2003-27.

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Handle: RePEc:fda:fdaddt:2003-27
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  1. Erdem, Tulin & Broniarczyk, Susan & Charavarti, Dipankar & Kapferer, Jean-Noel & Keane, Michael & Roberts, John & Steenkamp, Jan-Benedict & Swait, Joffre & Zettelmeyer, Florian, 1999. "Brand Equity, Consumer Learning and Choice," MPRA Paper 53022, University Library of Munich, Germany.
  2. Breusch, T.S. & Pagan, A.R., . "The Lagrange multiplier test and its applications to model specification in econometrics," CORE Discussion Papers RP -412, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Carol J. Simon & Mary W. Sullivan, 1993. "The Measurement and Determinants of Brand Equity: A Financial Approach," Marketing Science, INFORMS, vol. 12(1), pages 28-52.
  4. Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557, June.
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