The economic analysis of advertising
TLDR
A comprehensive survey of the economic analysis of advertising can be found in this article, with a focus on positive and normative theories of monopoly advertising, price and non-price advertising, theories of advertising and product quality, and theories that explore the potential role for advertising in deterring entry.Abstract:
This chapter offers a comprehensive survey of the economic analysis of advertising. A first objective is to organize the literature in a manner that clarifies what is known. A second objective is to clarify how this knowledge has been obtained. The chapter begins with a discussion of the key initial writings that are associated with the persuasive, informative and complementary views of advertising. Next, work that characterizes empirical regularities between advertising and other variables is considered. Much of this work is conducted at the inter-industry level but important industry studies are also discussed. The chapter then offers several sections that summarize formal economic theories of advertising. In particular, respective sections are devoted to positive and normative theories of monopoly advertising, theories of price and non-price advertising, theories of advertising and product quality, and theories that explore the potential role for advertising in deterring entry. At this point, the chapter considers the empirical support for the formal economic theories of advertising. A summary is provided of empirical work that evaluates the predictions of recent theories of advertising, including work that specifies and estimates explicitly structural models of firm and consumer conduct. This work is characterized by the use of industry (or brand) and even household-level data. The chapter then considers work on endogenous and exogenous sunk cost industries. At a methodological level, this work is integrative in nature: it develops new theory that delivers a few robust predictions, and it then explores the empirical relevance of these predictions at both inter-industry and industry levels. Finally, the chapter considers new directions and other topics. Here, recent work on advertising and media markets is discussed, and research on behavioral economics and neuroeconomics is also featured. A final section offers some concluding thoughts.read more
Citations
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The Theory of Monopolistic Competition.
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References
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Journal ArticleDOI
Advertising, Competition and Market Conduct in Oligopoly over Time
Endogenous sunk costs and the geographic distribution of brand shares in consumer package goods industries.
TL;DR: In this paper, Conley et al. describe industrial market structure in consumer package goods (CPG) industries using a unique database spanning 31 industries and the 50 largest US metropolitan markets, showing that the geographic cross-section of markets accounts for a much larger component of a brand's total share variation than the time-series.
Journal ArticleDOI
Television advertising and profitability
TL;DR: In this article, an empirical analysis reveals that television advertising has a significantly greater positive impact on firm profitability than does advertising in general, and that advertising media may have differential impacts on firm performance.
Advertising and Consumer Memory
TL;DR: In this article, the authors explore the idea that advertising interferes with consumers' memories of product experiences and propose a two-period model where a monopolist sells an experience good to a buyer who may only imperfectly recall her first period experience.
Book
Employment and inflation
James Meade,Susan Howson +1 more
TL;DR: The first volume of the Collected Papers of James Meade as mentioned in this paper contains his most important work on theoretical and applied aspects of employment and inflation from 1933-1985, including his contribution to the pioneering work of Richard Stone and himself on the first official national income and expenditure accounts for the UK is included, as are his major contributions to wartime planning of postwar employment policy.