Advertising coopetition: Who pays? Who gains?

James A. Dearden, Gary L. Lilien

Research output: Chapter in Book/Report/Conference proceedingChapter

8 Scopus citations

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.

Original languageEnglish (US)
Title of host publicationAdvertising and Differentiated Products
PublisherJAI Press
Pages203-219
Number of pages17
ISBN (Print)0762308230, 9780762308231
StatePublished - Jan 1 2001

Publication series

NameAdvances in Applied Microeconomics
Volume10
ISSN (Print)0278-0984

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)

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  • Cite this

    Dearden, J. A., & Lilien, G. L. (2001). Advertising coopetition: Who pays? Who gains? In Advertising and Differentiated Products (pp. 203-219). (Advances in Applied Microeconomics; Vol. 10). JAI Press.