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Who A dvertises Prices? A Firm Level Study Based on Survey Data

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  • David Paton

Abstract

Recent years have seen a growing body of literature devoted to the analysis of price advertising. Much of this work argues that price advertising leads to lower prices and is likely to be welfare improving. The questions of how much price advertising takes place and which firms are more likely to include price information in advertising have been somewhat neglected. This paper uses a unique new data set of UK company advertising to answer these questions. The evidence presented suggests that only a small proportion of firms include price information in any of their advertisements. Price information tends to be included in a higher percentage of the advertisements of distribution companies and of those which face more than ten competitors. In addition, the importance of price as a form of competition is a factor in determining the inclusion of price information, but only where the firm aims most of its advertisements towards final consumers.

Suggested Citation

  • David Paton, 1998. "Who A dvertises Prices? A Firm Level Study Based on Survey Data," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 57-75.
  • Handle: RePEc:taf:ijecbs:v:5:y:1998:i:1:p:57-75
    DOI: 10.1080/13571519884576
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    References listed on IDEAS

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    Keywords

    Advertising; Price; Search; Information;

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