Investigating the Relationship Between Advertising and Pricing in a Channel with Private Label Offering: A Theoretic Model
Bibliographic record
Abstract
We study the relationship between pricing and advertising decisions in a distribution channel where national brands are competing with a private label. We solve a three-stage game-theoretic model where the national brands compete on advertising and prices, and the retailer is investing in umbrella advertising for the store and is selling a private label. The obtained equilibrium strategies highlight the importance of determining the complementary or competitive roles of advertising to better understand the relationship between advertising and prices, and to better adjust strategies to varying competition levels in the marketplace. In particular, we find that advertising that expands the national brands' sales gives pricing power to manufacturers. However, persuasive advertising can create different effects on prices depending on the strength of the advertising effect and on the price competition level between the national and the store brands. For highly competitive advertising effects, the retailer should charge lower prices for the private label when it carries highly advertised national brands, increase the national brand's price that is being advertised and decrease the price of the competing national brand. The retailer's advertising leads to higher prices for the national and private labels. We consider several extensions of the base model (retail competition, asymmetric manufacturers and dynamic effects of advertising) and show that our results still hold in such settings. Marketing implications and comparative statistics are also discussed.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.009 | 0.006 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.002 |
| Science and technology studies | 0.001 | 0.001 |
| Scholarly communication | 0.000 | 0.001 |
| Open science | 0.000 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".