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A model of advertising format competition: on the use of celebrities in ads

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  • C. Robert Clark
  • Ignatius J. Horstmann

Abstract

We develop a model that endogenizes both advertising format ads with or without celebrity endorsements and the endorsement fee. Marketing studies suggest that celebrities enhance brand recall and perception of product value. In our model, ads featuring celebrities occur when the product market is large endorsements are likely for products sold nationally and when products are sufficiently similar that the persuasive character of advertising looms large in demand running shoes, beauty products, soft drinks, for example. Celebrity endorsement fees are increasing in market size and in the degree of similarity of the products being advertised.

Suggested Citation

  • C. Robert Clark & Ignatius J. Horstmann, 2013. "A model of advertising format competition: on the use of celebrities in ads," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1606-1630, November.
    • Handle: RePEc:cje:issued:v:46:y:2013:i:4:p:1606-1630
    DOI: 10.1111/caje.12056
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    Cited by:

    1. Ritwik Banerjee & Nabanita Datta Gupta, 2015. "Awareness Programs and Change in Taste-Based Caste Prejudice," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-17, April.
    2. Huang, Shaoan & Lien, Jaimie W. & Yang, Siqun & Zheng, Jie, 2024. "Lump-sum tax or flat income tax? Welfare implications of taxation policy in the presence of social comparison," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 20-33.

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