The incentive to advertise is a consequence of monopoly power, for there is nothing to gain from advertising by a firm that can sell its entire output at an invariant market price. Advertising is expenditure by a firm to increase the elasticity of demand for its product or to shift the demand curve to the right. This article examines six possible reasons for advertising. It may: 1) provide information about goods and services; 2) enhance a psychic quality of the advertised good; 3) reduce the psychic quality of goods that substitute for the advertised good; 4) persuade people to act against their true interests; 5) finance public goods; 6) provide a signal of quality. Though all six effects have been recognized in the literature, they have not been examined together. Focus on one exclusively can convey a misleading picture of the social consequences of advertising and suggest inappropriate policy prescriptions.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Publisher Info
Paper provided by Queen's University, Department of Economics in its series Working Papers with number
756.