Valuing Brand Collaboration: Evidence From a Natural Experiment
42 Pages Posted: 7 Mar 2019 Last revised: 17 Mar 2019
Date Written: March 14, 2019
We study how brand impacts consumer demand in the context of museum memberships in a U.S. metropolitan city. Over the course of our sample, one major museum with a highly recognized brand closed. During the closure, it sequentially co-branded with two established local museums. The closure and collaboration events, combined with individual panel data on museum memberships, allow us to measure how these changes in brand affect demand. Collaboration with the closed museum lifts demand for the partner museum; however, this aggregate increase masks two counter-acting forces. First, customers with no history of buying membership from either museum enter the market, consistent with the prominent brand providing a signal of vertical quality. Second, a sub-group of customers who previously purchased from either or both of the museums display decreased demand. This is consistent with a model of brand providing information about horizontal match value, with decreasing demand from the broadening of brand being an example of brand dilution. The magnitude of these offsetting forces varies between collaboration events. These results have implications for the treatment of brand intercepts in counterfactuals when studying consumer demand.
Keywords: Branding, Demand Estimation, Co-Branding, Brand Collaboration, Fine Arts
JEL Classification: L22, L24, L40, L82, M31, C53, C54
Suggested Citation: Suggested Citation