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Estimating Coke and Pepsi's Price and Advertising Strategies

  • Author(s): Golan, Amos
  • Karp, Larry S.
  • Perloff, Jeffrey M.
  • et al.
Abstract

A semi-parametric, information-based estimator is used to estimate strategies in prices and advertising for Coca-Cola and Pepsi-Cola. Separate strategies for each firm are estimated with and without restrictions from game theory. These information/entropy estimators are consistent, are efficient, and do not require distributional assumptions. These estimates are used to test theories about the strategies of firms and to see how changes in incomes or factor prices affect these strategies.

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