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Media Substitution in Advertising: A Spirited Case Study

  • Mark W. Frank


    (Department of Economics and International Business, Sam Houston State University)

This paper uses an unusually rich sample of liquor brands in the U.S. over the period 1994 to 2004 to test substitutability of advertising media. The liquor industry in the U.S. has experienced a substantial increase in case sales and advertising expenditures since the mid-1990s, raising numerous public policy concerns. Moreover, the mix of advertising media used by liquor brands also changed substantially following the industry’s decision in 1996 to begin using radio and television media. We find that the advertising media used by liquor firms are highly substitutable, meaning that partial media bans, such as a ban on television advertising, would prove ineffective in reducing liquor case sales.

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Paper provided by Sam Houston State University, Department of Economics and International Business in its series Working Papers with number 0606.

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Date of creation: Sep 2006
Date of revision:
Handle: RePEc:shs:wpaper:0606
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  1. Berndt, Ernst R & Savin, N Eugene, 1975. "Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances," Econometrica, Econometric Society, vol. 43(5-6), pages 937-57, Sept.-Nov.
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  3. Seldon, Barry J. & Jewell, R. Todd & O'Brien, Daniel M., 2000. "Media substitution and economies of scale in advertising," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1153-1180, December.
  4. Robert P. Leone, 1995. "Generalizing What Is Known About Temporal Aggregation and Advertising Carryover," Marketing Science, INFORMS, vol. 14(3_supplem), pages G141-G150.
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  7. Henry Saffer, 2000. "Alcohol Consumption and Alcohol Advertising Bans," NBER Working Papers 7758, National Bureau of Economic Research, Inc.
  8. Alvin Silk & Lisa Klein & Ernst Berndt, 2002. "Intermedia Substitutability and Market Demand by National Advertisers," Review of Industrial Organization, Springer, vol. 20(4), pages 323-348, June.
  9. Jon Nelson, 2003. "Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects using State Panel Data," Review of Industrial Organization, Springer, vol. 22(1), pages 1-25, February.
  10. Victor J. Tremblay & Carol Horton Tremblay, 2005. "The US Brewing Industry: Data and Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201518, June.
  11. repec:cup:cbooks:9780521314275 is not listed on IDEAS
  12. Saffer, Henry & Chaloupka, Frank, 2000. "The effect of tobacco advertising bans on tobacco consumption," Journal of Health Economics, Elsevier, vol. 19(6), pages 1117-1137, November.
  13. Seldon, Barry J. & Jung, Chulho, 1993. "Derived demand for advertising messages and substitutability among the media," The Quarterly Review of Economics and Finance, Elsevier, vol. 33(1), pages 71-86.
  14. Nelson, Jon P. & Young, Douglas J., 2001. "Do Advertising Bans Work? An International Comparison," Working Papers 6-01-1, Pennsylvania State University, Department of Economics.
  15. Jon Nelson, 2005. "Beer Advertising and Marketing Update: Structure, Conduct, and Social Costs," Review of Industrial Organization, Springer, vol. 26(3), pages 269-306, December.
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