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Complement or substitute? The internet as an advertising channel, evidence on advertisers on the Italian market, 2005-2009


  • Gambaro, Marco
  • Puglisi, Riccardo


During the last decade the internet has been the fastest growing segment in advertising. Exploiting Nielsen data, we analyze the advertising pattern displayed by the population of organizations (i.e. companies, non-profit institutions and public entities) that were active on the Italian national market during the period 2005-2009. Some reduced form evidence shows that - during this time period - smaller firms increased their ads investment on newspapers, magazines cinema comparatively more than larger firms. Radio and the internet display an opposite pattern, whereas are larger firms increasing their expenses more than smaller firms. In the lack of firmspecific output data, we also estimate a homothetic advertising cost function for different subsets of the sample. We find that media segments are (loose) substitutes, in that the estimated cross-price elasticities are positive but decidedly less than one.

Suggested Citation

  • Gambaro, Marco & Puglisi, Riccardo, 2013. "Complement or substitute? The internet as an advertising channel, evidence on advertisers on the Italian market, 2005-2009," 24th European Regional ITS Conference, Florence 2013 88464, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse13:88464

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    References listed on IDEAS

    1. Alvin J. Silk & Lisa R. Klein & Ernst R. Berndt, 2001. "Intermedia Substitutability and Market Demand by National Advertisers," NBER Working Papers 8624, National Bureau of Economic Research, Inc.
    2. Anderson, Richard G & Thursby, Jerry G, 1986. "Confidence Intervals for Elasticity Estimators in Translog Models," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 647-656, November.
    3. Charles Moss, 2000. "Estimation of the Cobb-Douglas with zero input levels: bootstrapping and substitution," Applied Economics Letters, Taylor & Francis Journals, vol. 7(10), pages 677-679.
    4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
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    More about this item


    Advertising; Internet; Media Substitution;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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