Measuring Brand Value in an Equilibrium Framework

Posted: 19 Jul 2006

See all articles by Avi Goldfarb

Avi Goldfarb

University of Toronto - Rotman School of Management

Qiang (Steven) Lu

University of Sydney Business School

Sridhar Moorthy

University of Toronto - Rotman School of Management

Date Written: August 2007

Abstract

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

Suggested Citation

Goldfarb, Avi and Lu, Qiang (Steven) and Moorthy, Sridhar, Measuring Brand Value in an Equilibrium Framework (August 2007). Available at SSRN: https://ssrn.com/abstract=917364

Avi Goldfarb (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Qiang (Steven) Lu

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia
61-2-90365260 (Phone)

Sridhar Moorthy

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/~moorthy

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