| Abstract: | Larger firms are often hypothesized to have higher prices than smaller competitors because of their market power or implicit collusion on prices. Advertising is often suggested as another cause of price elevation due to its ability to differentiate products of equivalent or inferior quality. This study examines the effect of these and other factors on prices in the major home appliance industry. The most interesting result is the strong corporate effect on prices, which permeates pricing strategies across categories, models and time. Contrary to the hypotheses listed above, larger corporations have lower prices, and advertised products are not higher priced. Strategic and policy implications are discussed. |
