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  4. October 2012
  5. The Evolution of Brand Preferences: Evidence from Consumer Migration

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Evolution of Brand Preferences: Evidence from Consumer Migration

  • Bart J. Bronnenberg
  • Jean-Pierre H. Dubé
  • Matthew Gentzkow
American Economic Review
vol. 102, no. 6, October 2012
(pp. 2472–2508)
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Abstract

We study the long-run evolution of brand preferences, using new data on consumers' life histories and purchases of consumer packaged goods. Variation in where consumers have lived in the past allows us to isolate the causal effect of past experiences on current purchases, holding constant contemporaneous supply-side factors. We show that brand preferences form endogenously, are highly persistent, and explain 40 percent of geographic variation in market shares. Counterfactuals suggest that brand preferences create large entry barriers and durable advantages for incumbent firms and can explain the persistence of early-mover advantage over long periods. (JEL D12, L11, M31, M37)

Citation

Bronnenberg, Bart J., Jean-Pierre H. Dubé, and Matthew Gentzkow. 2012. "The Evolution of Brand Preferences: Evidence from Consumer Migration." American Economic Review, 102 (6): 2472–2508. DOI: 10.1257/aer.102.6.2472

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • L11 Production, Pricing, and Market Structure; Size Distribution of Firms
  • M31 Marketing
  • M37 Advertising