Advertising coopetition: Who pays? Who gains?
Advertising and Differentiated Products
ISBN: 978-0-76230-823-1, eISBN: 978-1-84950-124-8
Publication date: 4 October 2001
Abstract
We develop a competitive advertising model, where a firm's advertising spending can be divided into two parts. One part, which we call generic advertising, affects only total market demand. The second component of that spending, brand advertising, affects market share directly, but may also have an effect on total market demand. We investigate how the profit margins of the firms, the advertising elasticities, the base market shares of the firms, and the market demand effect of brand advertising interact to determine the total amount of advertising spending in the market, who pays and how they pay (the ratio of generic to brand advertising). We also show that, in general, a market where generic advertising expenditures are set cooperatively will see higher expenditures of generic advertising than will a purely competitive market.
Citation
Dearden, J.A. and Lilien, G.L. (2001), "Advertising coopetition: Who pays? Who gains?", Baye, M.R. and Nelson, J.P. (Ed.) Advertising and Differentiated Products (Advances in Applied Microeconomics, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 203-219. https://doi.org/10.1016/S0278-0984(01)10010-6
Publisher
:Emerald Group Publishing Limited
Copyright © 2001, Emerald Group Publishing Limited