The Role of Retail Prices and Promotions in Determining Cigarette Brand Market Shares

The Role of Retail Prices and Promotions in Determining Cigarette Brand Market Shares Over the past two decades, two forms of price competition have emerged within the cigarette industry: the introduction and spread of discount and deep discount cigarettes and the increased use of price-related promotions. In this paper, we use quarterly market-level, scanner-based data on cigarette prices, promotions, and sales for 50 US markets over the period from 1994-IV through 2002-II to examine the impact of price and promotions on market shares for premium, discount, and deep discount brand cigarettes. Our estimates indicate that changes in relative prices, including those resulting from promotions, account for much of observed changes in market shares. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Role of Retail Prices and Promotions in Determining Cigarette Brand Market Shares

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2006 by Springer
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-006-0016-6
Publisher site
See Article on Publisher Site

Abstract

Over the past two decades, two forms of price competition have emerged within the cigarette industry: the introduction and spread of discount and deep discount cigarettes and the increased use of price-related promotions. In this paper, we use quarterly market-level, scanner-based data on cigarette prices, promotions, and sales for 50 US markets over the period from 1994-IV through 2002-II to examine the impact of price and promotions on market shares for premium, discount, and deep discount brand cigarettes. Our estimates indicate that changes in relative prices, including those resulting from promotions, account for much of observed changes in market shares.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Mar 13, 2006

References

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