Price Advertising by Manufacturers and Dealers Associations
University of Minnesota - Twin Cities - Carlson School of Management; University of Southern California - Marshall School of Business
Kenneth C. Wilbur
University of California, San Diego (UCSD) - Rady School of Management
University of Southern California - Marketing Department
Jorge M. Silva-Risso
University of California, Riverside - A. Gary Anderson Graduate School of Management
December 12, 2012
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, Experimentworking papers series
Date posted: February 8, 2011 ; Last revised: December 15, 2012
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