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Demand Spillovers, Combative Advertising, and Celebrity Endorsements

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  • Craig L. Garthwaite

Abstract

This paper studies the economic effects of endorsements. In the publishing sector, endorsements are found to be a business stealing form of advertising that raises title level sales without expanding the market size. If anything, the endorsements decrease aggregate adult fiction sales. This might be a result of the endorsed books being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found for nonendorsed titles written by endorsed authors. This spillover demand demonstrates the broad range of benefits of advertising for firms operating in a multiproduct brand setting.

Suggested Citation

  • Craig L. Garthwaite, 2014. "Demand Spillovers, Combative Advertising, and Celebrity Endorsements," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 76-104, April.
    • Handle: RePEc:aea:aejapp:v:6:y:2014:i:2:p:76-104
    Note: DOI: 10.1257/app.6.2.76
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    References listed on IDEAS

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    Cited by:

    1. Imke Reimers & Joel Waldfogel, 2021. "Digitization and Pre-purchase Information: The Causal and Welfare Impacts of Reviews and Crowd Ratings," American Economic Review, American Economic Association, vol. 111(6), pages 1944-1971, June.
    2. Suppliet, Moritz, 2020. "Umbrella branding in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 73(C).
    3. El Hedhli, Kamel & Zourrig, Haithem & Becheur, Imene, 2021. "Celebrity endorsements: Investigating the interactive effects of internalization, identification and product type on consumers’ attitudes and intentions," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    4. Inyoung Chae & Andrew T. Stephen & Yakov Bart & Dai Yao, 2017. "Spillover Effects in Seeded Word-of-Mouth Marketing Campaigns," Marketing Science, INFORMS, vol. 36(1), pages 89-104, January.
    5. Alexander Cardazzi & Joshua C. Martin & Zachary Rodriguez, 2023. "Information shocks and celebrity exposure: The effect of “Magic” Johnson on AIDS diagnoses and mortality in the U.S," Health Economics, John Wiley & Sons, Ltd., vol. 32(9), pages 2047-2079, September.
    6. Maximilian Maurice Gail & Phil-Adrian Klotz, 2021. "The Impact of the Agency Model on E-book Prices: Evidence from the UK," MAGKS Papers on Economics 202111, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Guler, Ali Umut, 2023. "Category expansion through cross-channel demand spillovers," International Journal of Research in Marketing, Elsevier, vol. 40(3), pages 629-658.
    8. Hartmut Egger & Josef Falkinger, 2016. "Limited Consumer Attention in International Trade," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1096-1128, November.
    9. McMullen, Jeffery S. & Ding, Amy Wenxuan & Li, Shibo, 2021. "From cultural entrepreneurship to economic entrepreneurship in cultural industries: The role of digital serialization," Journal of Business Venturing, Elsevier, vol. 36(6).
    10. Sérgio Nunes & Philip Cooke & Fábio Tomaz, 2022. "Celebrities and GreenSphere tourism," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(3), pages 627-643, June.
    11. Chen Liang & Zhan (Michael) Shi & T. S. Raghu, 2019. "The Spillover of Spotlight: Platform Recommendation in the Mobile App Market," Information Systems Research, INFORMS, vol. 30(4), pages 1296-1318, December.
    12. Alexander Cardazzi & Joshua Martin & Zachary Rodriguez, 2021. "Information Avoidance and Celebrity Exposure: The Effect of "Magic" Johnson on AIDS Diagnoses and Mortality in the U.S," Working Papers 21-04, Department of Economics, West Virginia University.
    13. Mi Hyun Lee & Sang Pil Han & Sungho Park & Wonseok Oh, 2023. "Positive Demand Spillover of Popular App Adoption: Implications for Platform Owners’ Management of Complements," Information Systems Research, INFORMS, vol. 34(3), pages 961-995, September.
    14. Alderighi, Marco & Bianchi, Carluccio & Lorenzini, Eleonora, 2016. "The impact of local food specialities on the decision to (re)visit a tourist destination: Market-expanding or business-stealing?," Tourism Management, Elsevier, vol. 57(C), pages 323-333.
    15. Tsuyoshi Toshimitsu, 2017. "Optimal Timing of Advertising with Demand Spillovers," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 43-60, March.
    16. Mayank Aggarwal & Anindya S. Chakrabarti & Chirantan Chatterjee, 2023. "Movies, stigma and choice: Evidence from the pharmaceutical industry," Health Economics, John Wiley & Sons, Ltd., vol. 32(5), pages 1019-1039, May.

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    More about this item

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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