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The effects of banning advertising in junk food markets

Author

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  • Dubois, Pierre
  • Griffith, Rachel
  • O'Connell, Martin

Abstract

There are growing calls to restrict advertising of junk foods. Whether such a move will improve diet quality will depend on how advertising shifts consumer demands and how firms respond. We study an important and typical junk food market -- the potato chips market. We exploit consumer level exposure to adverts to estimate demand, allowing advertising to potentially shift the weight consumers place on product healthiness, tilt demand curves, have dynamic effects and spillover effects across brands. We simulate the impact of a ban and show that the potential health benefits are partially offset by firms lowering prices and by consumer switching to other junk foods.

Suggested Citation

  • Dubois, Pierre & Griffith, Rachel & O'Connell, Martin, 2016. "The effects of banning advertising in junk food markets," CEPR Discussion Papers 11316, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11316
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    Cited by:

    1. Réquillart, Vincent & Soler, Louis-Georges & Zang, Yu, 2016. "Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms," Journal of Health Economics, Elsevier, vol. 50(C), pages 268-285.
    2. repec:kap:revind:v:51:y:2017:i:3:d:10.1007_s11151-017-9567-y is not listed on IDEAS
    3. Grundl, Serafin J. & Kim, You Suk, 2017. "Consumer Mistakes and Advertising : The Case of Mortgage Refinancing," Finance and Economics Discussion Series 2017-067, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    Keywords

    advertising; Demand estimation; dynamic oligopoly; welfare;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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