Generic Advertising and Product Differentiation Revisited

John M. Crespi

Journal of Agricultural & Food Industrial Organization, 2007, vol. 5, issue 1, pages 1153-1153

Abstract: This paper revisits the analysis of generic commodity advertising under product differentiation by Crespi and Marette. Crespi and Marette had shown that a dominant firm producing high-quality goods and facing a competitive fringe of lower quality producers could be harmed by a generic advertising campaign while the fringe was left unaffected. Under this dominant-firm model, a question remained why these producers might support a program for which they were indifferent. In this paper we show that under a duopoly model a high-quality firm may be harmed while its lower-quality rival may be made better off by a generic program, thus helping to explain why some producers might favor a program while others do not. Further, this paper dismisses the claim made by some litigants that increased branded advertising is the result of a deleterious effect of generic advertising.

Keywords: generic advertising; commodity promotion; product differentiation; checkoffs (search for similar items in EconPapers)
Note: oai:bepress:jafio-1153
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