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Overpricing, Market Outcomes, Advertising Effectiveness

Author

Listed:
  • Moritz Lukas
  • Vito Mollica
  • Markus Nöth
  • Stefan Truck

Abstract

This study investigates whether and to what extent the effectiveness of advertising is limited by overpricing of the advertised good. Using a unique dataset from the Australian residential property market, we find that 1) advertising is effective in increasing a property’s sale hazard and 2) advertising effectiveness is significantly reduced by overpricing. The monotonous decrease of advertising effectiveness with the extent of overpricing suggests that potential buyers are aware of the existence and the extent of overpricing. These patterns cannot be explained with absolute price levels and shed new light on the effectiveness of advertising relative to pricing aspects.

Suggested Citation

  • Moritz Lukas & Vito Mollica & Markus Nöth & Stefan Truck, 2016. "Overpricing, Market Outcomes, Advertising Effectiveness," ERES eres2016_210, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2016_210
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2016-210
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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