A Random-Coefficients Logit Estimation of Advertising Rivalry in the Liquor Industry

Over the past decade there has been a substantial increase in both liquor advertising and liquor sales in the United States.  The rise in advertising is partially due to the 1996 lifting of the liquor industry’s self-imposed ban on radio and television advertising.  While the post-ban industry remains predominately a print-media focused industry, radio advertising initially, and television advertising beginning after the year 2000, became new and increasingly important avenues for advertising expenditures. This paper uses a rich panel of liquor brands in an random-coefficients logit estimation framework to evaluate the brand-level demand in response to changes in the advertising media used by liquor brands during the post-ban period.