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Price Advertising by Manufacturers and Dealers AssociationsLinli XuUniversity of Minnesota - Twin Cities - Carlson School of Management; University of Southern California - Marshall School of Business Kenneth C. WilburDuke University Fuqua School of Business Sivaramakrishnan SiddarthUniversity of Southern California - Marketing Department Jorge M. Silva-RissoUniversity of California, Riverside - A. Gary Anderson Graduate School of Management December 12, 2012 Abstract: The behavioral literature suggests that manufacturer price advertising is less effective than dealer price advertising, yet manufacturer price advertising is commonly observed in practice. This paper manipulates the perceived source of a price advertisement in an experiment run on a sample of pick-up truck owners. It shows that manufacturer price advertising leads to lower indicators of potential demand than dealer price advertising. A similar pattern of results is found in an econometric analysis of pick-up truck sales, prices and advertising data. Counterfactual experiments suggest that a unified channel would shift 7-11% of its price advertising budget from the manufacturer to the dealer.
Number of Pages in PDF File: 45 Keywords: Advertising, Automobiles, Channels, Choice Modeling, Demand Estimation, Experiment working papers seriesDate posted: February 8, 2011 ; Last revised: December 15, 2012Suggested CitationContact Information
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