This note shows how the solution to the promotion problem—the problem of locating the optimal level of advertising in a downstream market—can be motivated simply, diagrammatically, and without the need to resort to complicated mathematical arguments. The optimality condition is for...

This article shows how the solution to the promotion problem--—the problem of locating the optimal level of advertising in a downstream market--—can be derived simply, empirically, and robustly through the application of some simple calculus and Bayesian econometrics. We derive the...