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Do media consumers really dislike advertising? An empirical assessment of the role of advertising in print media markets

  • Kaiser, Ulrich
  • Song, Minjae

This paper uses data on German consumer magazines observed between 1992 and 2004 to analyze the extent to which consumers (dis-)like advertising. We estimate logit demand models separately for the six most important magazine segments in terms of circulation. We find little evidence for readers disliking advertising. On the contrary, we show that readers in many magazine segments appreciate advertising. Readers of Women's magazines, Business and politics magazines as well as Car magazines -- market segments where advertisements are relatively more informative -- appreciate advertising while advertising is nuisance to readers of Adult magazines, a segment where advertisements are particularly uninformative. Demand for interior design magazines is not well identified. Our logit demand estimates are confirmed by logit demand models with random coefficients and by magazine-specific monopoly demand models.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 27 (2009)
Issue (Month): 2 (March)
Pages: 292-301

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Handle: RePEc:eee:indorg:v:27:y:2009:i:2:p:292-301
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  1. Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2005. "Advertising on TV: Under- or Overprovision?," Memorandum 15/2005, Oslo University, Department of Economics.
  2. Amil Petrin, 2002. "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 705-729, August.
  3. Nevo, Aviv, 1998. "Measuring Market Power in the Ready-To-Eat Cereal Industry," Research Reports 25164, University of Connecticut, Food Marketing Policy Center.
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  5. Dewenter, Ralf & Kaiser, Ulrich, 2005. "Anmerkungen zur ökonomischen Bewertung von Fusionen auf dem Printmedienmarkt," ZEW Discussion Papers 05-92, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Kaiser, Ulrich & Wright, Julian, 2006. "Price structure in two-sided markets: Evidence from the magazine industry," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 1-28, January.
  7. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  8. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum 18/2001, Oslo University, Department of Economics.
  9. Elena Argentesi & Lapo Filistrucchi, 2005. "Estimating market power in a two-sided market: the case of newspapers," Economics Working Papers ECO2005/07, European University Institute.
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  11. Susanne Kremhelmer & Hans Zenger, 2004. "Advertising and the Media," Industrial Organization 0403003, EconWPA.
  12. Ulrich Kaiser, 2007. "When Pricing Below Marginal Cost Pays Off: Optimal Price Choice in a Media Market with Upfront Pricing," CIE Discussion Papers 2007-05, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  13. Hausman, Jerry A. & Taylor, William E., 1981. "Panel data and unobservable individual effects," Journal of Econometrics, Elsevier, vol. 16(1), pages 155-155, May.
  14. Jerry HAUSMAN & Gregory LEONARD & J. Douglas ZONA, 1994. "Competitive Analysis with Differentiated Products," Annals of Economics and Statistics, GENES, issue 34, pages 159-180.
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  17. Choi, Jay Pil, 2006. "Broadcast competition and advertising with free entry: Subscription vs. free-to-air," Information Economics and Policy, Elsevier, vol. 18(2), pages 181-196, June.
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