Abstract
Does advertising make markets more or less competitive? This paper lays out an econometric strategy for estimating the effect of advertising on prices that exploits seasonal demand and imperfect targeting of consumers. We find mostly negligible effects of advertising on prices at monthly frequency: among the 35 (of 131) product categories with sufficient advertising seasonality to justify second-stage estimation, only nine have a significant effect, and those are typically small. This finding is essentially the result of the much greater seasonality in advertising than price.
| Original language | American English |
|---|---|
| Pages (from-to) | 199-222 |
| Number of pages | 24 |
| Journal | Journal of Industrial Economics |
| Volume | 63 |
| Issue number | 1 |
| DOIs | |
| State | Published - 1 Mar 2015 |
Bibliographical note
Publisher Copyright:© 2015 The Editorial Board of The Journal of Industrial Economics and John Wiley & Sons Ltd.