Advertising, Competition, and Local Craft Beer Markets

Sriparna Goswami () and Donghyuk Kim ()
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Sriparna Goswami: Amazon Japan
Donghyuk Kim: Iowa State University

Journal of Industry, Competition and Trade, 2025, vol. 25, issue 1, No 23, 15 pages

Abstract: Abstract We explore an equilibrium model of differentiated product markets where consumers have limited information, and firms compete with prices and informative advertisements with potential spillovers. The model implies that firms have an incentive to strategically under-advertise in markets with more competitors, weaker outside options, and positive advertising spillovers. We document empirical patterns suggesting that craft breweries advertise less and respond less sensitively to rival advertising in more competitive areas.

Keywords: Advertising; Competition; Spillovers (search for similar items in EconPapers)
JEL-codes: L13 M37 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10842-025-00457-6

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