Push-Me Pull-You: Comparative Advertising in the OTC Analgesics Industry

46 Pages Posted: 14 Jul 2015

See all articles by Simon P. Anderson

Simon P. Anderson

University of Virginia - Department of Economics

Federico Ciliberto

University of Virginia - Department of Economics; Centre for Economic Policy Research (CEPR)

Jura Liaukonyte

Cornell University

Regis Renault

University of Cergy-Pontoise

Multiple version iconThere are 3 versions of this paper

Date Written: June 30, 2015

Abstract

We derive equilibrium incentives to use comparative advertising that pushes up own brand perception and pulls down the brand image of targeted rivals. Data on content and spending for all TV advertisements in OTC analgesics enable us to construct matrices of dollar rival targeting and estimate the structural model. Using brands, optimal choices, these attack matrices identify diversion ratios, from which we derive comparative advertising damage measures. We find that comparative advertising causes more damage to the targeted rival than benefit to the advertiser. We simulate banning comparative advertising to find industry profits rise.

Keywords: comparative advertising, advertising targets, diversion ratios, attack matrix, push and pull effects, analgesics

JEL Classification: L130, M370, L650

Suggested Citation

Anderson, Simon P. and Ciliberto, Federico and Liaukonyte, Jura and Renault, Regis, Push-Me Pull-You: Comparative Advertising in the OTC Analgesics Industry (June 30, 2015). CESifo Working Paper Series No. 5418. Available at SSRN: https://ssrn.com/abstract=2630523

Simon P. Anderson

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3861 (Phone)
804-982-2904 (Fax)

Federico Ciliberto

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jura Liaukonyte

Cornell University ( email )

347 Warren Hall
Ithaca, NY 14853
United States

Regis Renault (Contact Author)

University of Cergy-Pontoise ( email )

33 Boulevard du Port
Cergy-Pontoise Cedex, Cedex 95011
France

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