The diverging interests of manufacturers and retailers famously give rise to the double marginalization problem but have consequences far beyond pricing. Advertising is another marketing instrument that is under the control of the manufacturer but its ultimate effect on consumer demand also depends on retailers’ pricing decisions. We decompose the effect of advertising in the channel and highlight an additional route through which advertising affects sales, namely via the changes in the retail price that a strategic retailer makes in response to changes in demand following manufacturer advertising. The total demand effect of advertising thus comprises the direct effects of advertising on market shares, and the indirect effects coming through adjustments that the retailer makes to the in-store prices of all the brands in a given product category in response to the shifted demand due to advertising. We match advertising data for four different categories (both food and non-food) to store-level scanner panel data, which also include information on wholesale prices. Controlling for wholesale prices, we establish in a reduced-form model that the retailer reacts to manufacturer advertising by changing retail prices instead of simply imposing a constant markup on the wholesale price. To further explore the role of the strategic response of the retailer in a systematic fashion and quantify the effects derived in the decomposition, we estimate a discrete-choice model of demand and determine the magnitude of the direct and indirect effects. We find that the indirect effect of advertising through retailer prices is about half the size of the direct effect, and thus substantively affects advertising effectiveness.

众所周知，制造商和零售商的利益分歧导致了双重边际化问题，但其后果远不止定价。广告是制造商控制下的另一种营销工具，但它对消费者需求的最终影响也取决于零售商的定价决策。我们分解了渠道中广告的影响，并强调了广告影响销售的另一条途径，即通过战略零售商为响应制造商广告后的需求变化而做出的零售价格变化。因此，广告的总需求效应包括广告对市场份额的直接影响，以及通过零售商对给定产品类别中所有品牌的店内价格进行调整以响应广告引起的需求变化而产生的间接影响。我们将四种不同类别（食品和非食品）的广告数据与商店级扫描仪面板数据相匹配，其中还包括批发价格信息。控制批发价格，我们建立了一个简化模型，即零售商通过改变零售价格而不是简单地对批发价格施加恒定加价来对制造商广告做出反应。为了进一步系统地探索零售商战略响应的作用并量化分解中产生的影响，我们估计了需求的离散选择模型并确定了直接和间接影响的大小。