The interaction between price and long-run variables in a multinational brand market

A brand market share model was used to analyze the interaction of price and long-run variables in a multinational brand market. The study concentrated on the impact of different variables such as product quality, advertising expenditure and country names on price sensitivity in the US subcompact automobile market. Results showed that the advertising effect was positively correlated to competitive reactivity. It also indicated that reliability is the only factor accounting for reduced price sensitivity and the country of origin negatively related to price elasticity for premium automobile brands.