GENERIC COMMODITY PROMOTION AND PRODUCT DIFFERENTIATION

This paper considers whether generic promotion lowers the differentiation among competing brands as claimed in the 1997 Supreme Court case (Wileman et al. v. Glickman). Commodity promotion is modeled as a multi-stage game where products are vertically differentiated. Analytical results show that if the benefits of generic advertising from increased demand are outweighed by the costs from lower product differentiation then high-quality producers will not benefit from generic promotion but producers of lower-quality goods may.