Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Review of Marketing Science

Editor-in-Chief: Haruvy, Ernan / Popkowski-Leszczyc, Peter T.L.

CiteScore 2018: 0.12

SCImago Journal Rank (SJR) 2018: 0.114
Source Normalized Impact per Paper (SNIP) 2018: 0.070

See all formats and pricing
More options …

Spillovers in Attribute Advertising

Steven Schmeiser
  • Corresponding author
  • Department of Economics, Mount Holyoke College, 50 College Street, South Hadley, MA 01075, United States of America
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2016-04-26 | DOI: https://doi.org/10.1515/roms-2014-0020


When firms advertise a vertically differentiated product attribute, they increase the weight consumers put on that attribute. This creates a spillover effect as one firm’s advertising can increase demand for other firms that also have the attribute. I develop a market share attraction model and find that as spillover increases, firms advertise less. Profit can be increasing or decreasing in spillover depending on the particular industry environment. Spillover lends a “public good” quality to advertising and firms free-ride in equilibrium. An advertising ban has an ambiguous effect on the profits of firms with the attribute, but always increases profits of firms without the attribute.

Keywords: advertising; spillover; vertical differentiation


  • Aruoba, S. B., and J. Fernández-Villaverde. 2014. “A Comparison of Programming Languages in Economics.” Working Paper 20263, National Bureau of Economic Research. http://www.nber. org/papers/w20263.

  • Bagwell, K.. 2007. “The Economic Analysis of Advertising.” Handbook of Industrial Organization 3:1701–844.Google Scholar

  • Bass, F. M., A. Krishnamoorthy, A. Prasad, and S. P. Sethi. 2005. “Generic and Brand Advertising Strategies in a Dynamic Duopoly.” Marketing Science 24 (4):556–68. doi:.CrossrefGoogle Scholar

  • Bezanson, J., S. Karpinski, V. B. Shah, and A. Edelman. 2012. “Julia: A Fast Dynamic Language for Technical Computing.” CoRR. abs/1209.5145.

  • Bloch, F., and D. Manceau. 1999. “Persuasive Advertising in Hotelling’s Model of Product Differentiation.” International Journal of Industrial Organization 17 (4):557–74. ISSN 0167–7187. doi:.CrossrefGoogle Scholar

  • Caputo, M. R.. 1996. “The Envelope Theorem and Comparative Statics of Nash Equilibria.” Games and Economic Behavior 13 (2):201–24. ISSN 0899–8256. doi:.CrossrefGoogle Scholar

  • Carey, C., and D. Bolton. 1996. “Brand Versus Generic Advertising and the Decision to Advertise Collectively.” Review of Industrial Organization 11 (1):93–105. ISSN 0889-938X. doi:.CrossrefGoogle Scholar

  • Dearden, J., and G. Lilien. 2001. “Advertising Competition: Who Pays? Who Gains?” In Advertising and Differentiated Products, Volume 10 of Advances in Applied Microeconomics, edited byM. Baye and J. Nelson. Oxford, UK: Elsevier Science.

  • Gruca, T. S., and D. Sudharshan. 1991. “Equilibrium Characteristics of Multinomial Logit Market Share Models.” Journal of Marketing Research 28 (4):480–2.Google Scholar

  • Karnani, A.. 1985. “Strategic Implications of Market Share Attraction Models.” Management Science 31 (5):536–47.Google Scholar

  • Kosin, I., K. Yasushi, and T. V. J. Generic. 2009. “Advertising in Markets with Informative Brand Advertising.” Journal of Agricultural & Food Industrial Organization 7 (1):1–22.Google Scholar

  • Krishnamurthy, S.. 2000. “Enlarging the Pie Vs. Increasing One’s Slice: An Analysis of the Relationship Between Generic and Brand Advertising.” Marketing Letters 11 (1):37–48. ISSN 0923–0645. doi:.CrossrefGoogle Scholar

  • Mesak, H. I., and T. L. Means. 1998. “Modelling Advertising Budgeting and Allocation Decisions Using Modified Multinomial Logit Market Share Models.” Journal of the Operations Research Society 49:1260–9.Google Scholar

  • Milgrom, P., and J. Roberts. 1986. “Price and Advertising Signals of Product Quality.” Journal of Political Economy 94 (4):796–821.Google Scholar

  • Piga, C.. 1998. “A Dynamic Model of Advertising and Product Differentiation.” Review of Industrial Organization 13 (5):509–22. ISSN 0889-938X. doi:.CrossrefGoogle Scholar

  • Seldon, B., and K. Doroodian. 1990. “Does Purely Predatory Advertising Exist?” Review of Industrial Organization 5 (3):45–70. ISSN 0889-938X. doi:.CrossrefGoogle Scholar

  • Sherer, F. M.. 1970. Industrial Market Structure and Economic Performance. Rand McNally College Publishing Co.

  • Tremblay, V. J., and C. Martins-Filho. 2001. “A Model of Vertical Differentiation, Brand Loyalty, and Persuasive Advertising.” In Advertising and Differentiated Products, Volume 10 of Advances in Applied Microeconomics, edited by M. Baye and J. Nelson, 221–38. Elsevier Science.

  • Tremblay, V., and S. Polasky. 2002. “Advertising with Subjective Horizontal and Vertical Product Differentiation.” Review of Industrial Organization 20 (3):253–65. ISSN 0889-938X. doi:.CrossrefGoogle Scholar

  • von der Fehr, N. -H. M., and K. Stevik. 1998. “Persuasive Advertising and Product Differentiation.” Southern Economic Journal 65 (1):113–26.Google Scholar

About the article

Published Online: 2016-04-26

Published in Print: 2016-06-01

Citation Information: Review of Marketing Science, Volume 14, Issue 1, Pages 69–87, ISSN (Online) 1546-5616, ISSN (Print) 2194-5985, DOI: https://doi.org/10.1515/roms-2014-0020.

Export Citation

©2016 by De Gruyter.Get Permission

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

Chen Zhu, Rigoberto A. Lopez, and Xiaoou Liu
Food Policy, 2019, Volume 86, Page 101723

Comments (0)

Please log in or register to comment.
Log in