The Effect of Government Advertising Policies on the Market Power of Cigarette Firms |
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Authors: | Shilpi Bihari Barry J Seldon |
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Institution: | (1) School of Social Sciences-GR 31, The University of Texas at Dallas, Richardson, TX 75080, USA |
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Abstract: | We estimate market power among cigarette manufacturers over 1952–1984, a period of uniform pricing. We apply the Bresnahan
approach; adjust it to the firm level; employ a dynamic model with habit persistence; and add an advertising equation, which
helps identify the parameters, increase degrees of freedom, and constrain parameters so we can interpret our results at the
firm level, despite the fact that the equations conform to what we might see in a market model. We consider effects of government
interventions upon demand and market power and find, for instance, that the 1971 broadcast advertising ban decreased market
power. |
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Keywords: | Advertising policies broadcast advertising ban cigarettes market power |
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