Masters of War: Rivals' Product Innovation and New Advertising in Mature Product Markets

We investigate the impact of rivals' product innovation and new advertising on a firm's financial market value in mature product markets. Our test bed is the carbonated soft drink market between 1999 and 2003, a period characterized by a near duopoly between Coca-Cola and Pespi. Empirically, we focus on new product announcements as a proxy of product innovation and on filed trademarks as a measure of new advertising. We find that rival product...