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Author Info
Giovanni Immordino () (Fondazione CARISAL and CSEF, Università di Salerno)

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Abstract

Firms have incentives to invest in wage reducing practices when they expect a high advertising equilibrium in the future product market competition. Incentives to invest in wage reducing practices like shifting the production to the third world or lobbying legislators to change labor market regulation by lowering the bargaining power of workers, can be explained by a link between the product market and labor market which operates through the effect of advertising on demand. Increased advertising implies under general conditions more production and therefore greater incentives to reduce production costs per unit.

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Publisher Info
Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 77.

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Date of creation: 01 Feb 2002
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Handle: RePEc:sef:csefwp:77

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Related research
Keywords: advertising; wages; global economy;

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
D60 - Microeconomics - - Welfare Economics - - - General
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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  1. Becker, Gary S & Murphy, Kevin M, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 941-64, November. [Downloadable!] (restricted)
  2. Roberts, M.J. & Samuelson, L., 1988. "An Empirical Analysis Of Dynamic, Non-Price Competition In An Oligopolistic Industry," Papers 3-88-14, Pennsylvania State - Department of Economics.
    Other versions:
  3. Olivier Blanchard & Francesco Giavazzi, 2001. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," NBER Working Papers 8120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August. [Downloadable!] (restricted)
  5. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring. [Downloadable!] (restricted)
  6. Schmalensee, Richard, 1983. "Advertising and Entry Deterrence: An Exploratory Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 636-53, August. [Downloadable!] (restricted)
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This page was last updated on 2009-11-8.

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