The Competitive Effects of Advertising in the US Automobile Industry, 1970‐94

Is advertising anticompetitive? One school of thought in industrial economics holds that advertising increases profits and reduces consumer welfare by creating spurious product differentiation and barriers to entry. Another school focuses on the informative character of advertising, claiming that advertising makes markets more competitive and reduces profits by supplying consumers with information about price and quality. We distinguish these views by examining the effect of advertising on competition in the US automobile industry. Our data include advertising, sales, profit, and market-share figures for General Motors, Ford, and Chrysler over a 25-year period from 1970 to 1994.We ask if advertising increases or decreases profitability, controlling for market structure and other factors affecting demand.Wefind that these firms cannot increase their profits above normal levels by increasing their advertising expenditures. This evidence supports the view that advertising serves primarily to transmit information, not to create entry barriers.     

Ethics,education, and corporate leadership

The purpose of this study is to determine the relative frequency of course offerings on social issues and business ethics in American business schools. Specifically, a random sample of the curricula of 119 American business schools were analyzed in order to gauge the importance given to coursework on ethics and social issues. The findings indicated that the incidence of such courses was generally low in American business curricula, particularly at the graduate level. These findings are discussed in light of the current concern for more responsible corporate behavior. G. R. Bassiry is currently Associate Professor of Management at California State University in San Bernardino, California. Formerly he served as Vice President and Acting President of Farabi University. He has published numerous journal articles on corporate leadership, international business, ethics, cultural conflicts and corporate policy and is the author of Power vs. Profit by Arno Press of New York Times.     

Scottish Economic Thought and the High Wage Economy: Hume, Smith and MCCulloch on Wages and Work Motivation

This article examines the work of Hume, Smith and McCulloch on wages and work motivation, and finds a clear and detailed case made for high wages within Scottish political economy. This analysis, through Hume and Smith, is based on key aspects of Scottish Enlightenment thought, and represents the culmination of the liberalization of thought regarding labour which developed in the eighteenth century. McCulloch, whose work on wages, incentives and motivation is more detailed and interesting than that of his 'post-Smithian' classical colleagues, is shown to be, in this area at least, clearly in the Scottish tradition.