Generic and Brand Advertising in Markets with Product Differentiation

Isariyawongse Kosin, Kudo Yasushi and Tremblay Victor J.
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Isariyawongse Kosin: Oregon State University
Kudo Yasushi: Oregon State University
Tremblay Victor J.: Oregon State University

Journal of Agricultural & Food Industrial Organization, 2007, vol. 5, issue 1, 17

Abstract: In this paper, we analyze how generic advertising affects brand advertising and firm profits in differentiated oligopoly markets. We show that in the Crespi (2007) model only the high quality firm will use brand advertising when differentiation is vertical. We also demonstrate that when differentiation is horizontal, the equilibrium is likely to be more symmetric in terms of firm profits, spending on brand advertising, and firm response to generic advertising. Finally, we point out that generic advertising will increase expenditures on brand advertising when firms play a supermodular game. The results confirm that there are many reasons why generic advertising may increase firm spending on brand advertising.

Keywords: generic advertising; vertical differentiation; horizontal differentiation; supermodular games (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (2)

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DOI: 10.2202/1542-0485.1179

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