Generic Advertising in Markets with Informative Brand Advertising
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Kosin Isariyawongse
This paper analyzes the interactions between generic advertising, brand advertising, and firm profits when brand advertising is purely informative. We develop duopoly models with vertical and horizontal differentiation when brand advertising lowers consumer search costs of identifying brand characteristics. The model demonstrates that firms can benefit from investing in brand advertising that lowers consumer search costs as well as from brand advertising that is purely persuasive. In addition, the results demonstrate that regardless of whether brand advertising is persuasive or informative, the outcome is more likely to be symmetric with horizontal differentiation than with vertical differentiation. The key distinction between this model and that of previous studies is that brand advertising across rivals is a strategic complement when persuasive and a strategic substitute when informative.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Article
- Generic Advertising in Markets with Informative Brand Advertising
- Product Proliferation in India's Cotton Seed Market: Are There Too Many Varieties?
- Complementarity among Alternative Procurement Arrangements in the Pork Packing Industry
- Can Risk Averse Competitive Input Providers Serve Farmers Efficiently?
- Buyer Power in U.K. Food Retailing: A 'First-Pass' Test
- Asymmetric Price Transmission, Market Power, and Supply and Demand Curvature
- Wine Brokers as Independent Experts
- Vertical Economies of Scope in Dairy Farming
- Why Did Contracts Supplant the Cash Market in the Broiler Industry? An Economic Analysis Featuring Technological Innovation and Institutional Response
