Estimating Demand for Differentiated Products: The Case of Beer in the U.S. Report as inadecuate




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This paper employs a nation-wide sample of supermarket scanner data to estimate a large brandleveldemand system for beer in the U.S. Unlike previous studies, this work estimates the ownandcross-advertising elasticities in addition to price elasticities. The dimensionality problem issolved with the Distance Metric method of Pinkse, Slade and Brett and the demand modelfollows the flexible Almost Ideal demand system. While price elasticities are consistent withprevious results, positive and negative cross-advertising elasticities imply the presence of bothcooperative and predatory effects of advertising expenditures across brands; however, the formereffect appears to dominate suggesting that advertising increases the overall demand for beer.

Keywords: Demand ; differentiated products ; distance metric ; Almost Ideal Demand System ; advertising ; beer

Subject(s): Demand and Price Analysis

Marketing

Issue Date: 2005-10

Publication Type: Report

PURL Identifier: http://purl.umn.edu/149023

Total Pages: 39

JEL Codes: D12; L66; M37

Series Statement: Research Report

089

Record appears in: University of Connecticut > Food Marketing Policy Center > Research Reports





Author: Rojas, Christian ; Peterson, Everett

Source: http://ageconsearch.umn.edu/record/149023?ln=en







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