Abstract

This paper revisits the analysis of generic commodity advertising under product differentiation by Crespi and Marette. Crespi and Marette had shown that a dominant firm producing high-quality goods and facing a competitive fringe of lower quality producers could be harmed by a generic advertising campaign while the fringe was left unaffected. Under this dominant-firm model, a question remained why these producers might support a program for which they were indifferent. In this paper we show that under a duopoly model a high-quality firm may be harmed while its lower-quality rival may be made better off by a generic program, thus helping to explain why some producers might favor a program while others do not. Further, this paper dismisses the claim made by some litigants that increased branded advertising is the result of a deleterious effect of generic advertising.

Submitted: December 5, 2006 · Accepted: March 28, 2007 · Published: March 28, 2007

Recommended Citation

Crespi, John M. (2007) "Generic Advertising and Product Differentiation Revisited," Journal of Agricultural & Food Industrial Organization: Vol. 5 : Iss. 1, Article 3.
DOI: 10.2202/1542-0485.1153
Available at: http://www.bepress.com/jafio/vol5/iss1/art3