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Advertising Part 3: Advertising and Market Structure

This article will be the final installment of my advertising series and it will be about the empirical findings from studies of the relationship between advertising and market structure looking at data from three industries: cola, photographic film, and saltine crackers.

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Advertising Part 2 – The Empirics of Advertising and Sales

At long last our arduous obligation as students are temporarily over! Following up from the previous article, I will introduce some empirical findings in the literature that help us better understand ‘advertising’. I am going to split the summary of empirical findings into two articles and here we will look at advertising’s effect on a firm’s sales. The next article will look at empirical findings of advertising’s effect on market share stability.

It is important to recognize the different effects that advertising could have on sales. Firstly, is there a positive relationship between present period advertising and present and future period sales? If the answer to this question was ‘yes’ then it would support some sort of goodwill building mechanism of advertising. Secondly, we need to look at whether advertising impacts the market’s demand or if it is simply a form of competition between firms within the market.

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Advertising – Good or Bad?

This week  I continue my series on the economics of advertising. Adding on to the introduction of the informative and persuasive view that I wrote about in my previous article, let’s proceed to consider some more specific contributions, and advertising’s potential influence on welfare. Have economists been able to come to a sweeping conclusion about the very unusual good ‘advertising’?

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Advertising Part 1: Read this Article NOW!

As the title of the article suggests, this week I am writing about the economics of advertising. I will be writing a series of articles exploring the advertising literature. We start the series off by an overview of the existing literature and how economists think about advertising. Advertising is a particularly interesting topic of study because it is literally ‘everywhere’ if you are a participant in a market economy. From all the screens we own, to the side of buildings, even on the grass we play sports on.

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