Advertising in demand systems: testing a Galbraithian hypothesis

In this paper we argue that the influence of advertising upon the inter-product distribution of demand is a system-wide phenomenon which is investigated better through a demand equation system rather than through single equation methods. Attention is focused upon a dynamic version of Deaton Muellbauer's AIDS model modified to include advertising terms. Within this framework using data on consumer's non-durable expenditure in the UK we carry out a preliminary test of Galbraith' hypothesis that advertising may affect the composition of aggregate consumer demand.     

Entry and industry evolution: the UK car industry, 1958—83

This paper models entry and the subsequent changes in market structure in three segments of the UK car industry, 1958–83. The entry equation emerges from a dynamic optimization model which allows for the costs of acquiring market share. The model is used to explore the hypothesis that the market penetration of entrants in this industry was facilitated by a post-entry advertising war which the incumbent firms lost. The basic hypothesis under examination is that advertising both facilitates and restricts entry, but that it does so in a way that varies systematically over time. The data are consistent with this view, showing that high advertising shares readily translate into high market shares, but that the escalation of industry advertising caused by entry can make high advertising entry strategies increasingly costly over time.     

Manufacturer's pricing strategy in a two-level supply chain with competing retailers and advertising cost dependent demand

The paper studies a two-echelon supply chain comprising one manufacturer and two competing retailers with advertising cost dependent demand. The manufacturer acts as the Stackelberg leader who specifies wholesale price for each retailer. The two retailers compete with each other in advertising and they have different sales costs. The manufacturer uses one of the following two pricing strategies: (i) setting the same wholesale price for both the retailers irrespective of the difference in their sales costs; (ii) setting different wholesale prices for the retailers depending on their sales costs. Two models are developed. In the first model, the manufacturer shares a fraction of each retailer's advertising cost while in the second model, the manufacturer does not share any retailer's advertising expenses. In both the models, we derive the retailers' and manufacturer's optimal strategies. A numerical example is given to illustrate the theoretical results developed in each model. Computational results show that it is always beneficial for the manufacturer to adopt different wholesale pricing strategy for the retailers.     

Measuring advertising intensity and intangible capital in the Greek food industry

The objective of the present paper is to examine market conduct and its determinants in the Greek food industry and to measure how and to what degree the industry and the firm's structural characteristics affect advertising intensity. An advertising intensity model giving emphasis to intangible capital is formulated. Data from ICAP have been used on a four-digit classification for the food industry during the 1990–1997 period. The empirical results indicate that intangible capital positively affects the advertising intensity of the firm and plays an important role in strategies that affect total cost, demand and structure of the market.     

Cigarette and Tobacco Consumption: Have Anti-Smoking Policies Made a Difference?

The consumption of cigarette and tobacco products in Australia is modelled using the rational addiction theory of Becker and Murphy, augmented by data on advertising, regulatory intervention, and demographic factors. Over the past 35 years, price (including tobacco taxes), real income, and demographic effects explain most of the variation in tobacco consumption. Advertising by tobacco companies has had a relatively small direct effect on consumption. Work-place smoking bans and health warnings on cigarette packs have had a relatively minor impact, while anti-smoking advertising and bans on electronic media advertising have had no detectable direct effect.     

THE LABOUR MARKET IMPACT OF THE UK DISABILITY DISCRIMINATION ACT: EVIDENCE FROM THE REPEAL OF THE SMALL FIRM EXEMPTION

This paper uses data from the Quarterly Labour Force Survey in the UK (1997–2006) and changes in the coverage of the Disability Discrimination Act (DDA), that result from the removal of the small firm exemption, to assess the labour market impact of the legislation. The data support a narrowing of the employment gap between the disabled and non‐disabled over the post DDA period. However, the evidence based on small firms does not support this being a direct result of the employment provisions of the DDA.     

Passing the “Torches of Freedom”: Smoking Behaviors of Women in Nepal

Globally, men constitute a larger percentage of smokers than women, but the rate of women smokers is growing. Smoking is a feminist issue: there are unique consequences for women's health, well-being, and agency. Recently passed anti-smoking legislation in Nepal, which has the highest rate of women smokers in South Asia, omits gender-conscious recommendations, potentially diminishing the impact of the legislation on women's lives. Relying on the 2001, 2006, and 2011 waves of the Nepal Demographic and Health Survey, this paper expands the dialogue around women's smoking and places it at the forefront of research on women's health issues. The results indicate that for women in Nepal, formal education and visiting a health facility mitigate smoking behaviors, whereas being employed and living in certain regions promotes smoking behaviors. The aim is for this and the ensuing inquiries to change government anti-smoking legislation in order to improve women's health.     

Advertising and the aggregate demand for cigarettes: A comment

The McGuinness-Cowling study represented a serious attempt to assess the impact of advertising on the demand for cigarettes in the UK, both before and after the 1962 report of the Royal College of Physicians (RCP). This note covers three points. First, it lists some general methodological criticisms of the McGuinness-Cowling approach. Second, it demonstrates a mathematical and conceptual error in their treatment of long-run elasticities. Third, it shows that corrected estimates of the long-run elasticities, based on the McGuinness-Cowling empirical results, are approximately thirty percent and forty percent of the two values given in their paper.     

Risk-Sensitive Dynamic Market Share Attraction Games

We present partial results showing that risk-sensitive oligopolists would spend less on advertising than would their risk-neutral counterparts. The model is an infinite-horizon stochastic game in which each firm's “goodwill” is a random function of both its own and its competitors' current and past advertising expenditures. Single-period firm profits have a market share attraction form. Each firm seeks to maximize its expected exponential utility of the sum of discounted profits. We analyze the impact that risk sensitivity and other parameters have on equilibrium advertising strategies by exploiting the special structure of the stochastic game model.Journal of Economic LiteratureClassification Number: C73.     

Alcohol consumption and alcohol advertising bans

The purpose of this paper is to empirically examine the relationship between alcohol advertising bans and alcohol consumption. Most prior studies have found no effect of advertising on total alcohol consumption. A simple economic model is provided which explains these prior results. The data set used in this study is a pooled time series of data from 20 countries over 26 years. The empirical model is a simultaneous equations system which treats both alcohol consumption and alcohol advertising bans as endogenous. The primary conclusions of this study are that alcohol advertising bans decrease alcohol consumption and that alcohol consumption has a positive effect on the legislation of advertising bans. The results indicate that an increase of one ban could reduce alcohol consumption by 5% to 8%. The alcohol price elasticity is estimated at about 0.2. The results suggest that recent exogenous decreases in alcohol consumption will decrease the probability of enactment of new bans and undermine the continuance of existing bans. Canada, Denmark, New Zealand and Finland have recently rescinded alcohol advertising bans. Alcohol consumption in these countries may increase or decrease at a slower rate than would have occurred had advertising bans remained in place.     

控股股东股权质押、控制权转移风险与广告投入

股权质押使控股股东面临控制权转移风险,其有动机进行市值管理。本文以2011-2019年中国A股上市公司为样本,考察股权质押情境下控股股东是否存在调整广告投入的行为。研究结果发现,控股股东进行股权质押后,公司广告投入水平显著提高,说明股权质押情境下控股股东会通过策略性地增加广告投入进行信息管理,而非通过削减广告投入进行向上盈余管理,证实广告具有短期股票回报效应;控制权转移风险较大时,控股股东股权质押对广告投入的正向影响更明显,说明股权质押情境下控股股东增加广告投入是出于缓解控制权转移风险的动机。进一步研究发现,在散户规模较大和产品直接与消费者接触的企业,广告更容易吸引投资者注意力,此时控股股东增加广告投入的动机更强,该行为短期内可以提振股价,但没有起到改善经营业绩的作用且加剧了股价波动。本文为资本市场和产品市场的联系提供了证据,且对相关部门加强上市公司广告费用监管具有一定的政策参考价值。     

More ads more revs: A note on media bias in review likelihood

This paper analyzes the existence of a possible media bias by determining the impact of the automobile manufactures' advertisements on the probability that two leading German car magazines review their products. By accounting for a possible endogeneity bias, we find a positive impact of advertising volumes on test probabilities.     

Advertising,quality and sales

This paper investigates claims that firm-specific effects in advertising-sales models can be attributed to a positive correlation between advertising and product quality. Using a standard Koyck transformation on an unbalanced panel dataset of UK firms, the implied long-lasting effects of advertising disappear when firm-specific effects are taken into account. This conclusion is robust to various econometric approaches. However, when the firm-specific effects are retrieved, they are found to correlate strongly with mean advertising. There is no discernible link between the firm-specific effects and whether a firm perceives quality to be an important form of competition in its market. The results give no support to the idea that advertising affects sales through associated product quality. They are consistent with the persistence of advertising within firms over time.     

Advertising bans and product demand: how does marketing affect demand for a differentiated product?

Applied economists have made extensive use of product category time series studies to investigate the effects that an advertising ban might have on markets for potentially harmful products such as tobacco and alcohol. This paper argues that such studies can cast little light on the question, partly because they contain no plausible hypothesis of how advertising influences demand in a market for differentiated products. This paper extracts such an hypothesis from literature on the psychology of consumer behaviour, and uses it in simple economic model of a differentiated product market. The analytical results are sensitive to the precise assumptions made about the competitive structure of the market. This apparently negative conclusion is an important warning against making over-generalized predictions about the effects of an advertising ban. Finally, the paper makes several proposals about how its hypothesis could be tested empirically.     

The simple analytics of tobacco taxation with illegal supply

This paper examines the impact of tobacco excise taxes where legal and illegal supplies coexist. The government's objective is to minimize cigarettes smoked in the economy (or to maximize revenue or to minimize illegal activity). It reacts to a competitive illegal supply in an adjoining jurisdiction. A model of consumer choice is used to demonstrate how demand response to tax changes can yield counterintuitive results. While the model mimics the Canadian market, similar situations characterize the US and European markets. A novel element of the paper is the treatment of externalities on the supply side rather than the demand side.     

Personalized mobile advertising: Its key attributes,trends, and social impact

Advertising media are a means of communication that creates different marketing and communication results among consumers. Over the years, newspaper, magazine, TV, and radio have provided a one-way media where information is broadcast and communicated. Due to the widespread application of the Internet, advertising has entered into an interactive communications mode. In the advent of 3G broadband mobile communication systems and smartphone devices, consumers' preferences can be pre-identified and advertising messages can therefore be delivered to consumers in a multimedia format at the right time and at the right place with the right message. In light of this new advertisement possibility, designing personalized mobile advertising to meet consumers' needs becomes an important issue. This research uses the fuzzy Delphi method to identify the key personalized attributes in a personalized mobile advertising message for different products. Results of the study identify six important design attributes for personalized advertisements: price, preference, promotion, interest, brand, and type of mobile device. As personalized mobile advertising becomes more integrated in people's daily activities, its pros and cons and social impact are also discussed. The research result can serve as a guideline for the key parties in mobile marketing industry to facilitate the development of the industry and ensure that advertising resources are properly used.     

Trade, Technology and UK Wage Inequality

This paper examines the impact of international trade and technical change on changes in the UK skill premium. We first measure trade as changes in product prices and technical change as TFP growth. Then we relate price and TFP changes to a set of underlying forces. Among our results are (a) changes in prices, not TFP, were the major force behind the rise in inequality in the 1980s; (b) changes in OECD prices and UK tariffs significantly raised 1980s skill premia through their effects on prices, and that industry concentration significantly raised 1980s skill premia through its effect on TFP.     

Tobacco consumption and policy in the United Kingdom

In recent years, several structural changes and sequences of shocks have occurred in the market for tobacco in the UK, including an explosive growth in smuggling. This study examines whether it is still possible to estimate a reliable, plausible tobacco demand equation from time series data for the UK whilst allowing for all of the various shocks and structural changes. A second objective of this study is to use the estimated demand function to evaluate tobacco policy in the UK, including the scope for using tax increases to achieve reduced consumption and increased revenues. It is found that smuggling has diminished the revenue yield of higher rates of duty, but total consumption of tobacco has been reduced. In addition to the introduction of further measures to control smuggling, policy may need to place more emphasis in the future on health campaigns and smoking restrictions.     

Medium,message and advertising effectiveness in the Greek processed meats industry

This paper examines the effectiveness of advertising in the fast-growing Greek processed meats sector using an unbalanced panel data set of 34 firms during the period 1983–1997. In analysing the relationship between firms' sales and advertising this study differentiates between the type/content of the advertising message and the medium used to communicate it. Advertising expenditures are disaggregated into company and product campaigns in television, radio, and print media. Empirical results strongly reject the hypothesis of homogeneous consumer response to all kinds of advertising that is implicit in studies that aggregate advertising expenditures. The results also indicate an inefficient allocation of advertising resources by the firms of the sector; advertising in the least utilized print media was determined to be by far the most effective strategy during the study period.     

Advertising,consumer search costs and prices in a professional service market

Since stigler's (1961) seminal article on the economics of information it has been argued that producer advertising is a substitute for consumer search. This view of advertising has been implicit in recent liberalization of restrictions on advertising by professionals (e.g. lawyers, doctors, accountants, etc.). Using th e model of the price discriminating professional developed by Masson and Wu (1974) the impact of solicitor advertising on the level of conveyancing fees charged by a sample of Scottish Solicitors is estimated. The analysis distinguishes between different forms of advertising. The advertising-of-information theory cannot be rejected for some forms of advertising in one (property value) submarket but it can be in the other (higher property value) submarket. The evidence here rejects (i) the view that all advertising is a substitude for consumer search and (ii) the view that actions to reduce search costs (such as advertising) necessarily reduce price discrimination.