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Review of Marketing Science

Ed. by Rao, Ram C.

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CiteScore 2016: 0.17

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1546-5616
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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
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Published Online: 2016-04-26 | DOI: https://doi.org/10.1515/roms-2014-0020

Abstract

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

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About the article

Published Online: 2016-04-26

Published in Print: 2016-06-01


Citation Information: Review of Marketing Science, ISSN (Online) 1546-5616, ISSN (Print) 2194-5985, DOI: https://doi.org/10.1515/roms-2014-0020.

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