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Advertising expenditure and consumer prices

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  • Rauch, Ferdinand

Abstract

This paper studies the effect of a change in the marginal costs of advertising on advertising expenditures of firms and on consumer prices. I make use of a policy change in Austria, that involved an increase of the taxation of advertising in parts of the country, and a simultaneous decrease in other parts. I show that advertising expenditures of firms move quickly in the opposite direction of the marginal costs of advertising. Consumer prices increase with advertising in some industries, and decrease in others. This effect correlates with informational differences in advertisements across industries.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 31 (2013)
Issue (Month): 4 ()
Pages: 331-341

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Handle: RePEc:eee:indorg:v:31:y:2013:i:4:p:331-341

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Advertising; Advertising tax; Advertising and prices;

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References

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Advertising, brands, and prices
    by Eric Crampton in Offsetting Behaviour on 2012-11-15 18:00:00
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Cited by:
  1. Carol A. Corrado & Janet X. Hao, 2014. "Brands As Productive Assets: Concepts, Measurement, and Global Trends," WIPO Economic Research Working Papers 13, World Intellectual Property Organization - Economics and Statistics Division.

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