Biomedical Engineering Reference
In-Depth Information
spillover that takes place over time as a result of patients' ongoing experience with
competing brands. Interestingly, both these spillovers arise empirically only when the
new entrant brands are similar to the previously existing brands.
Researchers have also reported spillover effects in other contexts such as the
selective interpretation of product attributes not mentioned in ads (Ahluwalia et al.
2001
). Further, Ling et al. (
2002
) (LBK) empirically estimate brand-level spillover
effects of ads for prescription drugs (in the antiulcer and heartburn categories) on
the corresponding OTC versions. LBK's focus is on the (temporal) forward spill-
over effect of ads for established prescription drug brands on the corresponding
OTC versions that are subsequently introduced in the same market.
We conclude this section by highlighting the effects of another set of spillovers
that can arise across countries. For instance, Van Everdingen et al. (
2009
) examine
how a new product's “takeoff” in one country affects the takeoff timing in another
country (see also Verniers et al.
2011
). Their study employs data from eight high
technology products (e.g., DVD players, video cameras), from 1977 to 2004, across
55 countries. Using a relatively general econometric specification that allows for
asymmetric effects for a given pair of countries, they find that the new product take-
off timing is prone to an across-market (cross-country) spillover effect inasmuch as
the country is poorer, the higher the number of tourists it receives, and the higher its
population density compared to the other countries. Further, the time to takeoff in a
given country is affected by the corresponding takeoff time (and not the time of
introduction) in a foreign country. The intercountry influence depends on their
geographical and economic proximity, but not on their cultural similarity. The influ-
ence on a foreign country's time to takeoff is positively related to a given country's
physical size, economic wealth, and the number of exports.
By contrast (in terms of the number of product categories considered),
Chintagunta and Desiraju (
2005
) econometrically examine the (supply-side) inter-
actions among three competitors within a product sub-category across several
geographical markets. They use quarterly data from 1988 to the end of 1999 on the
sales, prices, and detailing levels of Prozac, Zoloft, and Paxil (which belong to the
SSRI antidepressants subcategory) in the USA, the United Kingdom, Germany,
France, and Italy. These authors postulate that the levels of the marketing variables
(i.e., prices and detailing) in a given market will depend on three factors: the within-
market response to each variable, along with the nature of the interfirm strategic
interactions both within that market and across markets.
In particular, an across-market “spillover” strategic interaction may arise
because: (a) the local market affiliate and a global pricing team can set prices jointly;
(b) order of entry into the category can matter across countries, since some European
governments practice cross-country reference pricing; and (c) the threat of aggres-
sive actions in one market can result in possible punishment by rivals in the other
markets (the multi-market contact effect). Chintagunta and Desiraju (
2005
) employ
an econometric specification that allows for a general pattern of across-market
spillover interactions and helps in identifying which interactions affect prices and
detailing levels in a given market. Their results indicate that all the three factors
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