Measuring Brand Value in an Equilibrium Framework
Posted: 19 Jul 2006
Date Written: August 2007
We propose a structural approach to measuring brand value in an equilibrium framework using observational data. Brand value is defined as the difference in equilibrium profit between the brand in question and its counterfactual unbranded equivalent on search attributes. Our structural model allows us to make this computation rigorously, taking into account competitors' and retailers' reactions in the real and in the counterfactual situations. We illustrate our method on aggregate and individual-level data in two product categories, ready-to-eat cereal and ketchup, and compare our brand value estimates with those obtained from previously offered reduced-form methods.
Keywords: brand value, brand equity, NEIO, structural modeling
JEL Classification: M31
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