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The answer to this has to do with consumer tastes and perceived quality. Consumers tend to feel that a brand name product is of higher quality than a product that does not have a brand.
One of the determinants of the level of demand for a good is consumer tastes. If consumers believe that the good is of high quality, they will pay more for it than if they think it is of low quality. This is where branding comes in. Creating and publicizing a brand tends to create the perception of quality among consumers. When they perceive this, they will pay more for the good.
So, the reason for this is that consumers believe that branded goods are of higher quality and therefore are worth a higher price.
I don't disagree with the above statement. I do, however, feel that mind conditioning has a large effect. Ads are aimed at triggering feelings associated with their products. Basically, they are brain-washing the consumer to feeling good when they see their product. That is why you always see happy people associated with a particular drug or drinking a particular beverage. You are conditioned to think that their product will bring happiness and that is a huge tool to have when selling.
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