6533b824fe1ef96bd1281293

RESEARCH PRODUCT

Investigating sales and advertising rivalry in the UK multipurpose vehicle market (1995–2002)

Francisco Requena-silventeJames T. Walker

subject

OligopolyEconomics and EconometricsEconomicsAdvertisingGeneral Business Management and AccountingRivalryTest (assessment)

description

To what extent do managers account for rivals’ advertising responses? We employ static and dynamic panel techniques to derive estimates that are used to test whether the Dorfman-Steiner optimality condition held in the UK multipurpose vehicle (MPV) market between 1995 and 2002. We show that omitting the response of own advertising to rivals’ advertising leads to substantially lower optimal levels of advertising expenditure compatible with non-retaliation strategies. When recognition of interdependence by the members of the oligopoly is taken into account, the Dorfman-Steiner condition holds. To complete the analysis of the advertising-sales relationship we also examine advertising determinants and find that rival advertising is also a significant determinant of own firm advertising behaviour.

yearjournalcountryeditionlanguage
2007-03-01Journal of Economics and Business
https://doi.org/10.1016/j.jeconbus.2006.03.002