Seasonality and the Effect of Advertising on Price

Journal of Industrial Economics, 2015, vol. 63, issue 1, 199-222

Abstract: type="main">

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.

Date: 2015
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Working Paper: Seasonality and the Effect of Advertising on Price (2008)
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Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

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