how does advertising depend on competition evidence from u s brewing the relationship between market structure and advertising has been extensively studied but has generated sharply opposing theoretical predictions as well as inconclusive empirical findings likely because of severe endogeneity concerns we exploit the 2008 merger of miller and coors in the u s brewing industry to examine how changes in local concentration affect firms advertising behavior well established regional preferences over beer brands and the sharp increase in concentration from the merger make this an excellent setting to analyze this question we find a significant positive effect of local market concentration on advertising expenditures a 100 point increase in the herfindahl hirschmann index measure of concentration increases advertising per capita by about 5 our findings shed light on how and when firms choose to deploy advertising the online appendix is available at https doi org 10 1287 mnsc 2017 2889 this paper was accepted by eric anderson marketing

does intellectual property restrict output an analysis of pharmaceutical markets abstract standard analysis of intellectual property focuses on the balance between incentives for research and the welfare costs of restraining output through monopoly pricing we present evidence from the pharmaceutical industry that output often fails to rise after patent expirations patents restrict output by allowing monopoly pricing but may also boost output and welfare by improving incentives for marketing a form of nonprice competition we analyze how nonprice factors such as marketing mitigate and even offset the costs of monopoly associated with intellectual property empirical analysis of pharmaceutical patents suggests that in the short run patent expirations reduce output and consumer welfare by decreasing marketing in the long run patent expirations benefit consumers but by 30 percent less than would be implied by the reduction in price alone focusing only on the pricing issues of intellectual property may lead to incomplete or even inaccurate conclusions for welfare

demand for smokeless tobacco role of advertising while the prevalence of smokeless tobacco st is low relative to smoking the distribution of st use is highly skewed with consumption concentrated among certain segments of the population rural residents males whites low educated individuals furthermore there is suggestive evidence that use has trended upwards recently for groups that have traditionally been at low risk of using st and thus started to diffuse across demographics this study provides the first estimates at the national level of the effects of magazine advertising on st use the focus on magazine advertising is significant given that st manufacturers have been banned from using other conventional media since the 1986 comprehensive st act and the 1998 st master settlement agreement this study is based on the 2003 2009 waves of the national consumer survey ncs a unique data source that contains extensive information on the reading habits of individuals matched with magazine specific advertising information over the sample period this allows detailed and salient measures of advertising exposure at the individual level and addresses potential bias due to endogeneity and selective targeting we find consistent and robust evidence that exposure to st ads in magazines raises st use especially among males with an estimated elasticity of 0 06 there is suggestive evidence that both st taxes and cigarette taxes reduce st use indicating contemporaneous complementarity between these tobacco products sub analyses point to some differences in the advertising and tax response across segments of the population the effects from this study inform the debate on the cost and benefits of st use and its potential to be a tool in overall tobacco harm reduction

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

the welfare economics of buy local this paper provides a theoretical model of how various aspects of the buy local movement influence social welfare and output across two regions market power considerations are also addressed where one region has a competitive advantage in production while consumers buy local for a variety of reasons our model categorizes some of the motivations and analyzes the impacts on output under various market structures welfare is calculated when demand is changed due to subsidies or taxes we also allow for the presence of externalities we find that in the absence of market power or externalities deadweight losses occur when the region without a competitive advantage buys more locally however in the presence of significant externalities and in the presence of market power it is possible that profits to producers from consumers buying local could increase more than consumer utility is harmed thus increasing aggregate social welfare this could arise if consumers genuinely feel there are sufficient positive externalities from local production or negative externalities from non local production to warrant the loss of efficiency we point out that understanding the motivation behind the movement is critical when analyzing welfare effects since some motivations are counter productive to each other

globesity the effects of globalization on obesity and caloric intake abstract we examine the effect of globalization in its economic and social dimensions on obesity and caloric intake namely the so called globesity hypothesis our results suggest a robust association between globalization and both obesity and caloric intake a one standard deviation increase in globalization is associated with a 23 8 percent increase in obese population and a 4 3 percent rise in calorie intake the effect remains statistically significant even after using an instrumental variable strategy to correct for some possible reverse causality and ommited variable bias a lagged structure and corrections for panel standard errors however we find that the primary driver of the globesity phenomenon is the social rather than the economic dimension of globalization and specifically the effect of changes in information flows and social proximity on obesity a one standard deviation increase in social globalization increased the percentage of obese population by 13 7 percent

consumer response to commodity specific and broad based promotion programs for fruits and vegetables generic promotion activities have traditionally been used for individual agricultural commodities yet there is renewed interest in implementing a mandatory broad based promotion program for all fruits and vegetables here we use data from an experiment that introduce subjects to various promotional efforts for fruits and vegetables to estimate the shift and rotational effects of advertising econometric results indicate that commodity specific promotional efforts may not be effective at increasing demand for fruits and vegetables after controlling for various demographic differences among treatments our results show that consumers valuation of fruits and vegetables was highest among subjects exposed to broad based advertisements copyright 2011 oxford university press

do pharmacists buy bayer informed shoppers and the brand premium we estimate the effect of information and expertise on consumers willingness to pay for national brands in physically homogeneous product categories in a detailed case study of headache remedies we find that more informed or expert consumers are less likely to pay extra to buy national brands with pharmacists choosing them over store brands only 9 percent of the time compared to 26 percent of the time for the average consumer in a similar case study of pantry staples such as salt and sugar we show that chefs devote 12 percentage points less of their purchases to national brands than demographically similar nonchefs we extend our analysis to cover 50 retail health categories and 241 food and drink categories the results suggest that misinformation and related consumer mistakes explain a sizable share of the brand premium for health products and a much smaller share for most food and drink products we tie our estimates together using a stylized model of demand and pricing

on the simple economics of advertising marketing and product design we propose a framework for analyzing transformations of demand such transformations frequently stem from changes in the dispersion of consumers valuations which lead to rotations of the demand curve in many settings profits are a u shaped function of dispersion high dispersion is complemented by niche production and low dispersion is complemented by mass market supply we investigate numerous applications including product design advertising marketing and sales advice and the construction of quality differentiated product lines we also suggest a new taxonomy of advertising distinguishing between hype which shifts demand and real information which rotates demand

advertising learning and consumer choice in experience good markets an empirical examination this article empirically analyzes different effects of advertising in a nondurable experience good market a dynamic learning model of consumer behavior is presented in which i allow both informative effects of advertising and prestige or image effects of advertising this learning model is estimated using consumer level panel data tracking grocery purchases and advertising exposures over time empirical results suggest that in this market advertising s primary effect was that of informing consumers the estimates are used to quantify the value of this information to consumers and evaluate the welfare implications of an alternative advertising regulatory regime

moral dimensions of the wta wtp disparity an experimental examination abstract contrary to welfare economic theory empirical evidence suggests that the amount of money people are willing to accept wta to forego a commodity will generally exceed the amount of money they are willing to pay wtp to gain the commodity this paper undertakes an experimental examination of the wta wtp disparity using conventional and ecologically produced eggs the results of this experiment reveal that the difference between the mean wtp and wta for conventional eggs is negligible while the mean wta is more than 1 5 times higher than the mean wtp in the case of ecological eggs an explanation for this result is offered following the boyce et al boyce r b brown t c mcclelland g h peterson g l schulze w d 1992 an experimental examination of intrinsic values as a source of the wta wtp disparity am econ rev 82 1366 1373 notion that an asymmetrical assignment of moral responsibility may cause wta to exceed wtp by comparing the two studies a tentative conclusion is that the valuation disparity is likely to increase with a corresponding increase in the degree of assigned moral responsibility

beggar thy neighbor advertising theory and application to generic commodity promotion programs profits from generic advertising by a producer group often come partly at the expense of producers of closely related commodities the resulting tendency toward excessive advertising is exacerbated by check off funding to analyze this beggar thy neighbor behavior we compare a scenario where different producer groups cooperate and choose their advertising expenditures jointly to maximize the sum of profits across the groups and a scenario where they optimize independently in an illustrative example using 1998 data for u s beef and pork the noncooperatively chosen expenditure on beef and pork advertising is more than three times the cooperative optimum copyright 2001 oxford university press

bubbles crashes and endogenous expectations in experimental spot asset markets1 spot asset trading is studied in an environment in which all investors receive the same dividend from a known probability distribution at the end of each of t 15 or 30 trading periods fourteen of twenty two experiments exhibit price bubbles followed by crashes relative to intrinsic dividend value when traders are experienced this reduces but does not eliminate the probability of a bubble the regression of changes in mean price on lagged excess bids number of bids minus the number of offers in the previous period p pt a f b 1 o l supports the hypothesis that a e d the one period expected value of the dividend and that f 0 where excess bids is a surrogate measure of excess demand arising from homegrown capital gains losses expectations thus when bt 1 o goes to zero we have convergence to rational expectations in the sense of fama 1970 that arbitrage becomes unprofitable the observed bubble phenomenon can also be interpreted as a form of temporary myopia tirole 1982 from which agents learn that capital gains expectations are only temporarily sustainable ultimately inducing common expectations or priors tirole 1982 four of twenty six experiments all using experienced subjects yield outcomes that appear to the chart s eye to converge early to rational expectations although even in these cases we get 0 and small price fluctuations of a few cents that invite scalping

information and subsidies complements or substitutes abstract does providing information about a product influence the impact of price subsidies on purchases this question is particularly relevant for health products in developing countries where both informational campaigns and price subsidies are common policy instruments we conduct a field experiment in zambia and find that providing information about a new version of a product significantly increases the impact of price subsidies on take up taken alone the information manipulation has no significant impact on demand while the price subsidy substantially increases demand however the evaluation of either intervention in isolation fails to capture the significant complementarity between the two

market provision of broadcasting a welfare analysis this paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry advertising levels may be too low or too high depending on the nuisance cost to viewers the substitutability of programs and the expected benefits to advertisers from contacting viewers market provision may allocate too few or too many resources to programming and these resources may be used to produce programs of the wrong type monopoly ownership may produce higher social surplus than competitive ownership and the ability to price programming may reduce social surplus

coarse thinking and persuasion we present a model of uninformative persuasion in which individuals think coarsely they group situations into categories and apply the same model of inference to all situations within a category coarse thinking exhibits two features that persuaders take advantage of i transference whereby individuals transfer the informational content of a given message from situations in a category where it is useful to those where it is not and ii framing whereby objectively useless information influences individuals choice of category the model sheds light on uninformative advertising and product branding as well as on some otherwise anomalous evidence on mutual fund advertising

seasonality and the effect of advertising on price does advertising make markets more or less competitive this paper lays out an econometric strategy for estimating the effect of advertising on prices that exploits seasonal demand and imperfect targeting of consumers we find mostly negligible effects of advertising on prices at monthly frequency among the 35 of 131 product categories with sufficient advertising seasonality to justify second stage estimation only nine have a significant effect and those are typically small this finding is essentially the result of the much greater seasonality in advertising than price

research note additional learning and implications on the role of informative advertising observers argue that evidence for the persuasive role of advertising comes from competitive categories where increases in advertising lead to higher average prices conversely others claim that advertising serves a purely informational role here higher levels of advertising lead to better informed consumers and this should increase competition and stimulate lower prices the objective of this study is to neither confirm nor refute either of these perspectives it is rather to show that increases in informative advertisingalone can lead to both higher or lower prices i further show that the direction of this relationship depends on the level of differentiation between competing firms similar to grossman and shapiro 1984 i examine conditions where the differences between competing products are small but i also examine conditions where the differences are significant the role of advertising is to inform consumers about individual products and higher advertising for a product means that more of the potential market knows about it higher levels of advertising increase the relative importance of fully informed consumers compared to partially informed consumers this dynamic is the basis for explaining why informative advertising can push prices either up or down in a uniformly distributed spatial market

the short run and long run effects of behavioral interventions experimental evidence from energy conservation we document three remarkable features of the opower program in which social comparison based home energy reports are repeatedly mailed to more than six million households nationwide first initial reports cause high frequency action and backsliding but these cycles attenuate over time second if reports are discontinued after two years effects are relatively persistent decaying at 10 20 percent per year third consumers are slow to habituate they continue to respond to repeated treatment even after two years we show that the previous conservative assumptions about post intervention persistence had dramatically understated cost effectiveness and illustrate how empirical estimates can optimize program design jel d12 d83 l94 q41

corporate governance and efficiency in banking evidence from emerging economies abstractthis article investigates the impact of corporate governance on bank efficiency across a sample of 139 commercial banks from 17 countries of central and eastern europe during the period 200

credence goods misleading labels and quality differentiation due to differences in information disclosure mechanisms consumer misinformation about the quality of many credence goods is more endemic at intermediate levels of the quality spectrum rather than at the extremes using an oligopoly model of vertical product differentiation we examine how consumers overestimation of the quality of intermediate quality products affects firms incentives to improve product quality the firms non cooperatively choose the quality of their product before choosing its price or quantity irrespective of the nature of second stage competition bertrand or cournot we find that quality overestimation by consumers increases profit of the intermediate quality firm and motivates it to raise its product s quality in response the high quality firm improves its product quality even further but ends up with lower profit overall average quality of the vertically differentiated product improves which raises consumer surplus social welfare increases when the firms compete in prices but falls when they compete in quantities

environment versus growth a criticism of degrowth and a plea for a growth in recent debates on environmental problems and policies the strategy of degrowth has appeared as an alternative to the paradigm of economic growth this new notion is critically evaluated by considering five common interpretations of it one conclusion is that these multiple interpretations make it an ambiguous and rather confusing concept another is that degrowth may not be an effective let alone an efficient strategy to reduce environmental pressure it is subsequently argued that a growth i e being indifferent about growth is a more logical social aim to substitute for the current goal of economic growth given that gdp per capita is a very imperfect indicator of social welfare in addition focusing ex ante on public policy is considered to be a strategy which ultimately is more likely to obtain the necessary democratic political support than an ex ante explicit degrowth strategy in line with this a policy package is proposed which consists of six elements some of which relate to concerns raised by degrowth supporters

environmental damage evaluation in a willingness to accept scenario a latent class approach based on familiarity in this paper we report on the results of the application of a latent class model that was designed to identify and characterize unobserved preference heterogeneity in the context of a willingness to accept wta framework involving negative environmental externalities stemming from the expansion of the port of valencia we investigated the hypothesis that respondents with greater familiarity with the targeted good and any related environmental damage would demand more compensation that is they would have a significantly higher wta based on respondents familiarity with the port of valencia and their pre existing knowledge about the negative consequences of its potential expansion three clusters based on six indicators are identified results show that contrary to what might be expected familiarity with a public good does not in all cases have a significant effect on stated wta

quantity restrictions on advertising commercial media bias and welfare abstract we study the welfare effect of a quantity restriction on advertising in free to air television and other advertising financed media in the presence of commercial media bias broadcasters face a trade off between increasing the number of viewers by sending content that is highly valued by viewers and increasing the price of advertising by choosing advertiser friendly content a cap on advertising drives the per viewer price of ads up thus content improves for viewers therefore the cap can be welfare enhancing even when viewers are not ad averse competition among broadcasters makes it more likely that a cap on advertising improves welfare thus there is a complementarity between regulation and competition on this market we also show that a tax on advertising revenues has quite different effects than a cap on advertising quantity

the fleeting effect of advertising abstract this paper adds to the evidence that advertising effects depreciate rapidly inclusion of lagged advertising in empirical models may be unnecessary in addition the notion that accumulated advertising effects may be a barrier to entry is called into question

experimentation in two sided markets we study optimal experimentation by a monopolistic platform in a two sided market the platform provider is uncertain about the strength of the externality each side is exerting on the other setting participation fees on both sides it gradually learns about these externalities by observing actual participation levels this provides an informational rationale for introductory pricing with the platform provider charging a fee below the myopically optimal level on at least one side of the market if the externality that the other side exerts is sufficiently well known and weaker than the externality it experiences the platform provider extracts surplus from that side by charging it a fee above the myopically optimal level this interplay between learning and surplus extraction is crucial to the market outcome and its dynamics

the rise of obesity in europe an economic perspective obesity in europe is rising this paper investigates the economic rationales for public intervention to control obesity we present new empirical evidence showing that family background is related to obesity among young european adults this evidence provides a strong basis for intervention on equity grounds particularly targeted towards children the case for intervention on efficiency grounds is less clear cut and in most cases the evidence is relatively weak we find insufficient evidence that information deficiencies are important as the majority of europeans appear to be aware of the bad consequences of obesity on health we also find that the potential health insurance externality non obese effectively subsidizing obese individuals is small in support of policy intervention we show that there are product and labour market imperfections obese employees earn less than the non obese we also find that there is a remarkably high proportion of individuals with self control problems who fail to stick to their self declared weight related plans regulations that affect fast food advertisements and the location and access to fast food vending machines and establishments may help these individuals in controlling their weight giorgio brunello pierre carl michaud and anna sanz de galdeano

incumbency advantage and political campaign spending limits abstract this paper presents a model which captures the three main arguments for and against campaign spending limits campaign spending limits are purported to restrict the incumbent s ability to exploit his fundraising advantage in contrast to conventional wisdom a ceiling increases the incumbent s probability of victory regardless of the candidates relative fundraising abilities as long as the challenger is not more effective in campaign spending if the challenger is more effective in campaign spending ceilings have a non monotonic effect when the incumbent enjoys a mild initial voter disposition advantage a moderate ceiling decreases the incumbent s probability of victory but further restricting the limit favors the incumbent irrespective of incumbency status the marginal benefit to quality decreases with a more restrictive cap in an open seat contest a more restrictive limit improves the electoral prospects of the superior quality candidate stricter ceilings may lead to the unintended consequence of increased expected spending

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

the effects of banning advertising in junk food markets we develop a structural model to analyze the eects of banning advertising on market equilibria and welfare in junk food markets we consider the impact on demand and prices and show how to quantify welfare eects when advertising might lead consumers to take decisions that are inconsistent with their underlying preferences we use transaction level data on the potato chips market and nd that banning advertising leads to a direct reduction in demand but also toughens price competition leading to lower prices and increased demand welfare increases as consumers benet from no longer making distorted

who benefits from misleading advertising considering a model of price and misleading advertising competition between two brands producing horizontally and vertically differentiated brands we investigate allocative implications of misinformation and related regulatory policies although misinformation distorts consumers decision making misinformation can correct inefficiencies resulting from misallocation of goods thereby increasing welfare however advertising competition may create a prisoner s dilemma for firms and reduce welfare but smart consumers unaffected by misinformation and consumers preferring low quality brands may gain we also demonstrate how a biased policymaker who places different weights on producers and consumers surpluses behaves in response to misinformation disseminated by firms

a simple theory of advertising as a good or bad our analysis treats advertisements and the goods advertised as complements in stable metautility functions and generates new results for advertising by building on and extending the general analysis of complements by assimilating the theory of advertising into the theory of complements we avoid the special approaches to advertising found in many studies that place obstacles in the way of understanding the effects of advertising we also use this approach to evaluate advertising from a welfare perspective whether there is excessive or too little advertising depends on several variables the effects on consumer utility the degree of competition in the market for advertised goods the induced changes in prices and outputs of advertised goods and whether advertising is sold to consumers

misleading advertising in duopoly this paper builds a model of strategic misleading advertising in duopolistic markets with horizontal product differentiation and advertising externality between firms we investigate the effects of regulating misinformation on market competition behaviour of firms and social welfare we show that the degree of advertising externality and the magnitude of advertising costs are crucial for determining the welfare effects of several regulations including prohibiting misleading advertising educating consumers taxing production and taxing misleading advertising we extend the model by introducing heterogeneous consumers heterogeneous production costs between firms and the degree of advertising informativeness our results have important policy implications for the debate regarding regulation of advertising especially direct to consumer advertising for prescription and over the counter drugs ce texte construit un modele de publicite mensongere strategique dans des marches duopolistiques ou il y a differentiation horizontale des produits et externalites de publicite entre firmes on examine les effets d une reglementation de la desinformation sur la concurrence dans le marche sur le comportement des firmes et sur le bien etre social on montre que le degre d externalites de la publicite et la magnitude des couts de publicite sont des elements cruciaux pour determiner les effets de bien etre de plusieurs reglementations y compris prohiber la publicite mensongere eduquer les consommateurs taxer la production et taxer la publicite mensongere on developpe le modele pour prendre en compte les consommateurs heterogenes des couts de production heterogenes entre firmes et le contenu informationnel de la publicite ces resultats ont des implications importantes pour la politique publique dans les debats concernant la reglementation de la publicite en particulier la publicite directe au consommateur pour les medicaments avec et sans ordonnance

advertising for consideration abstract we analyze markets where firms competing on price advertise to increase the probability of entering consumers consideration sets we find that moderately costly advertising allows firms to raise prices and possibly profits by reducing the fraction of price conscious consumers and by segmenting the market according to whether or not consumers consider the lower priced firm however when the cost of advertising is sufficiently low advertising leads to a prisoners dilemma that adversely impacts profits without affecting expected prices

the veblen effect targeted advertising and consumer welfare the technology of advertising in the twenty first century allows for better targeting of consumers and better identification of consumer subgroups in the population this makes it easier for firms to create in their advertising a desire to belong to the group identified with a product we explore this kind of advertising in a monopoly model the firm has an incentive to target this kind of advertising to the most lucrative segment of a particular social grouping and while advertising does create value for the consumer it leads to an outcome where less output is sold at a higher price in a narrower or more segmented market than in the standard monopoly model as a result even though consumers value the identification effect they are worse off this is because the firm uses advertising to exploit a form of price discrimination and appropriate more surplus

advertising expenditure and consumer prices this paper studies the effect of a change in the marginal costs of advertising on advertising expenditures of firms and on consumer prices i make use of a policy change in austria that involved an increase of the taxation of advertising in parts of the country and a simultaneous decrease in other parts i show that advertising expenditures of firms move quickly in the opposite direction of the marginal costs of advertising consumer prices increase with advertising in some industries and decrease in others this effect correlates with informational differences in advertisements across industries

a comparison of naive and experienced bidders in common value offer auctions a laboratory analysis laboratory economics experiments typically use financially motivated students as subjects an ongoing issue is whether this is an appropriate subject pool since the students are typically inexperienced in the types of decision making required of them in the lab this paper addresses this issue in the context of common value offer auctions as we compare the behaviour of experienced business executives in the construction contract industry experts with that of naive student subjects results of previous research of this sort have been equivocal in some cases experts make the same errors as novices in other cases they do not hogarth and reder i987 a series of sealed bid common value offer auctions in which bidders compete for the right to supply an item of unknown cost were conducted inherent to common value auctions cvas is an adverse selection problem which may result in below normal or negative profits the winner s curse experimental studies have documented the presence of the winner s curse with financially motivated student subjects in high price demand side auctions kagel et al i986 kagel and levin i986 the experiments reported here generalise these earlier studies from bid to offer auctions also in employing offer auctions we establish a setting with which our experts are familiar thus allowing their experience the best chance to manifest itself

fast food restaurant advertising on television and its influence on childhood obesity childhood obesity is an escalating problem around the world that is especially detrimental as its effects carry on into adulthood to estimate the effects of television fast food restaurant advertising on children and adolescents with respect to being overweight this paper employs the 1979 child young adult national longitudinal survey of youth and the 1997 national longitudinal survey of youth to estimate the effects of television fast food restaurant advertising on children and adolescents with respect to being overweight a ban on these advertisements would reduce the number of overweight children ages 3 11 in a fixed population by 18 percent and would reduce the number of overweight adolescents ages 12 18 by 14 percent the elimination of the tax deductibility of this type of advertising would produce smaller declines of between 5 and 7 percent in these outcomes but would impose lower costs on children and adults who consume fast food in moderation because positive information about restaurants that supply this type of food would not be completely banned from television

a theory of combative advertising in mature markets with competing firms a common role for advertising is to shift consumer preferences towards the advertiser in a tug of war with no effect on category demand in this paper we analyze the effect of such combative advertising on market power we show that depending on the nature of consumer response combative advertising can reduce price competition to benefit competing firms however it can also lead to a procompetitive outcome where individual firms advertise to increase their own profitability but collectively become worse off this is because combative advertising can intensify price competition such that an advertising war leads to a price war similar to price competition advertising competition can result in a prisoner s dilemma where all competing firms make less profit even when the effect of each firm s advertising is to enhance consumer preferences in its favor given such procompetitive effects we further show that cost of combative advertising could be a blessing in disguise higher unit cost of advertising resulting in lower equilibrium levels of advertising leading to higher prices and profits we conduct a laboratory experiment to investigate how combative advertising by competing brands influences consumer preferences our experimental analysis offers strong support for our conclusions

a cue theory of consumption psychological experiments demonstrate that repeated pairings of a cue and a consumption good eventually create cue based complementarities the presence of the cue raises the marginal utility derived from consumption in this paper such dynamic preferences are embedded in a rational choice model behavior that arises from this model is characterized by endogenous cue sensitivities costly cue management commitment and cue based spikes in impatience the model is used to understand addictive habit forming behaviors and marketing the model explains why preferences change rapidly from moment to moment why temptations should sometimes be avoided and how firms package and position goods

innocuous minimum quality standards abstract the present note shows that innocuous minimum quality standards namely below the lowest quality level in a market may have effects on equilibrium outcomes such a mqs reduces the incentive to invest in r d by the quality leading firm

managerial incentives and capital management the paper shows how career concerns rather than effort aversion can induce a natural incongruity in risk preferences between managers and superiors a model based on learning about managerial talent is developed to study second best contractual remedies we show that the optimal wage contract is an option of the value of the manager s human capital for insurance reasons and that consequently rationing of capital is often required to counterbalance the manager s resulting incentive to overinvest rationing is strictly superior to price decentralization offering one reason for the prevalence of centralized capital budgeting procedures

a new meta analysis on the wtp wta disparity abstract this study reports a new meta analysis of papers that elicit willingness to pay wtp and willingness to accept compensation wta measures of value for the same good we investigate the effects of type of good and several survey design features on the wtp wta disparity measured as the logarithm of the ratio of mean wta to mean wtp confirming horowitz and mcconnell s 2002 pioneering meta analysis we find the disparity is smaller for ordinary private goods than for public and non market goods that it is not solely an artifact of using hypothetical transactions or other weak experimental or survey methods and that it is smaller for studies using student subjects in addition we find that the disparity is smaller when subjects have experience valuing the good in real markets or through repeated experimental trials in contrast to horowitz and mcconnell we find the disparity is significantly smaller in studies using incentive compatible elicitation mechanisms the disparity is smaller in more recent studies an effect that is attributable only in part to changes in study characteristics

the roles of corporate governance in bank failures during the recent financial crisis abstract this paper analyzes the roles of corporate governance in bank defaults during the recent financial crisis of 2007 2010 using a data sample of 249 default and 4 021 no default us commercial banks we investigate the impact of bank ownership and management structures on the probability of default the results show that defaults are strongly influenced by a bank s ownership structure high shareholdings of outside directors and chief officers managers with a chief officer position such as the ceo cfo etc imply a substantially lower probability of failure in contrast high shareholdings of lower level management such as vice presidents increase default risk significantly these findings suggest that high stakes in the bank induce outside directors and upper level management to control and reduce risk while greater stakes for lower level management seem to induce it to take high risks which may eventually result in bank default some accounting variables such as capital earnings and non performing loans also help predict bank default however other potential stability indicators such as the management structure of the bank indicators of market competition subprime mortgage risks state economic conditions and regulatory influences do not appear to be decisive factors in predicting bank default

generic product advertising spillovers and market concentration we examine the decision to advertise a homogenous good we show that the likelihood of inefficiently low advertising rests heavily on how one models the mechanism by which advertising affects demand regardless of this mechanism however there is always a lower bound of concentration below which no advertising occurs even when welfare enhancing in such cases mandatory programs will raise welfare if they induce entry although producer surplus may decline our model also provides an explanation for the stylized fact that advertising intensity first rises and then falls as concentration increases copyright 2008 oxford university press

deregulation and bank financial policy the standard view that banks can value maximize by exploiting non risk rated deposit insurance ignores the potential loss of a valuable bank charter due to insolvency recognition of this effect changes the bank s optimal financial policy and can induce extreme risk averting as well as risk taking behavior however as the value of the bank charter falls the risk taking strategy is more apt to dominate therefore current deregulation of the banking industry by easing entry and devaluing charters holds the potential for increases in the incidence of insolvency unless offsetting policies are instituted

when saving is gambling abstract prize linked savings pls accounts which allocate interest using lottery payments rather than fixed interest encourage savings by appealing to households gambling preferences i introduce new data on casino cash withdrawals to measure gambling and examine how individual gambling expenditures respond to the introduction of pls in nebraska using a difference in differences design after pls is introduced individuals who live in counties that offer pls reduce gambling by at least 3 more than unaffected individuals the substitution effect is stronger in low frills gambling environments which most resemble pls indicating that these accounts fulfill the desire to gamble

the bank capital decision a time series cross section analysis this paper seeks to explain the dramatic decline in capital to asset ratios in u s commercial banks during the last two decades it is hypothesized that the rise in nominal interest rates during this period might have contributed substantially to the fall in capital ratios time series cross section estimation supports the hypothesis regarding the interest rate bank capital is the sum of equity plus debt subordinated to deposits capital provides a cushion that protects the bank from insolvency when the value of its assets falls a bank can meet its obligations to depositors as long as losses on its asset portfolio do not exceed its capital the ratio of capital to total assets in u s commercial banks has fallen dramatically in the last two decades dropping from 11 7 percent in 1961 to 5 7 percent in 1978 the lowest level since world war ijj1 figure 1 shows the decline in the ratio of capital to noncash assets these figures suggest that the federal deposit insurance corporation fdic and uninsured depositors are being exposed to increased probabilities of losses from bank insolvencies however relatively little empirical research has been devoted to the determinants of the bank capital decision further the existing work see for example peltzman 24 mingo 20 or mayne 17 18 uses only cross sectional data and therefore does not necessarily explain the decline in capital to asset ratios over time previous empirical research has also focused on book values rather than market values of debt and equity although market values provide better estimates of the protection afforded by capital this practice might be partly justified by the attention paid to book values by bank regulators however the increasing use of qualitative factors as well as book ratios in capital regulation indicates that regulators are aware of the deficiencies in book values many of the so called qualitative considerations are precisely the factors that distinguish market from book value 6 pp 78 80 finally difficulties arise over the proper measure of capital the empirical studies cited above treat equity and debt capital symmetrically both equity and assistant professor of finance economics boston university school of management this paper was originally written as part of a doctoral dissertation at m i t helpful suggestions from robert mcdonald richard schmalensee larry summers and edward j kane are gratefully acknowledged l these statistics are based on the market values of capital and assets the methods used to construct the market value series are described in the appendix capital asset ratios based on book values also have fallen over the period in question although not as severely

are ceos really paid like bureaucrats a common view is that there is little correlation between firm performance and ceo pay using a new fifteen year panel data set of ceos in the largest publicly traded u s companies we document a strong relationship between firm performance and ceo compensation this relationship is generated almost entirely by changes in the value of ceo holdings of stock and stock options in addition we show that both the level of ceo compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980 largely because of increases in stock option grants

the charitable activities of terrorist organizations violent groups sometimes invest significant resources in social work notably in the form of charities and ngos the present paper models a terrorist group s charities as a means to advertise its cause in order to raise popular support the analysis explains how different types of organizations arise in equilibrium depending on government policies then the interaction between a purely terrorist group and an independent local ngo is examined it is shown that a purely terrorist group always invests in more attacks than an integrated terrorist charity organization furthermore the latter may have more ngo activity than a separate local ngo

systemic risk and bank size abstract in this paper we analyse firm level systemic risk for us and european banks from 2004 to 2012 we observe that common systemic risk indicators are primarily driven by firm size which implies an overriding concern for too big to fail institutions however smaller banks may still pose considerable systemic threats as exemplified by the northern rock debacle in 2007 by introducing a simple standardisation we obtain new risk measures that often prove to be superior predictors of financial distress during the 2007 2009 subprime crisis we conclude that the new measures could be a valuable addition to the existing indicators employed in basel iii to identify systemically important banks

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

choice set heterogeneity and the role of advertising an analysis with micro and macro data abstract the authors show how to use microlevel survey data from a tracking study on brand awareness in conjunction with data on sales and advertising expenditures to improve the specification estimation and interpretation of aggregate discrete choice models of demand in a departure from the commonly made full information assumption they incorporate limited information in the form of choice sets to reflect that consumers may not be aware of all available brands at purchase time they find that both the estimated brand constants and the price coefficient are biased downward when consumer heterogeneity in choice sets is ignored these biased estimates can lead firms to make costly price setting mistakes in addition the tracking data enable the authors to identify separately two processes by which advertising influences market shares they find that advertising has a direct effect on brand awareness inclusion in choice set in addition to its effect on consumer preferences increase in utility this

informing transforming and persuading disentangling the multiple effects of advertising on brand choice decisions prior behavioral research has suggested that advertising can influence a consumer s quality evaluation through informative and transformative effects the informative effect acts directly to inform a consumer of product attributes and hence shapes her evaluations of brand quality the transformative effect affects the consumer s evaluation of brand quality by enhancing her assessment of her subsequent consumption experience in addition advertising may influence a consumer s utility directly even without providing any explicit information this is the persuasive effect in this paper we propose a framework that formally models the processes through which all three effects of advertisements impact consumers brand evaluations and their subsequent brand choice decisions in particular we model source credibility confirmatory bias and bounded rationality on the part of consumers by appropriately modifying the standard bayesian learning approach our model conforms closely to prior behavioral literature and the experimental findings therein in our empirical analysis we get significant estimates of both informative and transformative effects across brands we find interesting temporal patterns across the effects for instance the importance of transformative effects seem to grow over time while that of informative effects diminishes finally we conduct policy experiments to examine the impact of increased ad intensity on advertising effects as well as the role played by consumption ambiguity

food and beverage television advertising exposure and youth consumption body mass index and adiposity outcomes this study examines the relationships between exposure to food and beverage product television advertisements and consumption and obesity outcomes among youth individual level data on fast food and soft drink consumption and body mass index bmi for young adolescents from the early childhood longitudinal study kindergarten cohort 1998 1999 and adiposity measures for children from the us national health and nutrition examination survey 2003 2004 were combined with designated market area dma nielsen media advertising ratings data to account for unobserved individual level and dma level heterogeneity various fixed and random effects models were estimated the results showed that exposure to soft drink and sugar sweetened beverage ssb advertisements is economically and statistically significantly associated with higher frequency of soft drink consumption among youth even after controlling for unobserved heterogeneity with elasticity estimates ranging from 0 4 to 0 5 the association between fast food advertising exposure and fast food consumption disappeared once we controlled for unobservables exposure to cereal advertising was significantly associated with young adolescents bmi percentile ranking but exposures to fast food and soft drink advertisements were not the results on adiposity outcomes revealed that children s exposure to cereal advertising was associated with both percent body fatness and percent trunk fatness fast food advertising was significantly associated with percent trunk fatness and marginally significantly associated with percent body fatness and exposure to ssb advertising was marginally significantly associated with percent body and trunk fatness the study results suggest that continued monitoring of advertising is important and policy debates regarding the regulation of youth directed marketing are warranted

fast food costs and adolescent body mass index evidence from panel data this study draws on four waves of the 1997 national longitudinal survey of youth and external data to examine the relationship between adolescent body mass index bmi and fast food prices and fast food restaurant availability using panel data estimation methods to account for individual level unobserved heterogeneity analyses also control for contextual factors including general food prices and the availability of full service restaurants supermarkets grocery stores convenience stores and commercial physical activity related facilities the longitudinal individual level fixed effects results confirm cross sectional findings that the price of fast food but not the availability of fast food restaurants has a statistically significant effect on teen bmi with an estimated price elasticity of 0 08 the results suggest that the cross sectional model over estimates the price of fast food bmi effect by about 25 there is evidence that the weight of teens in low to middle socioeconomic status families is most sensitive to fast food prices

dynamics of retail advertising evidence from a field experiment we use a controlled field experiment to investigate the dynamic effects of retail advertising the experimental design overcomes limitations hindering previous investigations of this issue our study uncovers dynamic advertising effects that have not been considered in previous literature we find that current advertising does affect future sales but surprisingly the effect is not always positive for the firm s best customers the long run outcome may be negative this finding reflects two competing effects brand switching and intertemporal substitution we also find evidence of cross channel substitution with the firm s best customers switching demand to the ordering channel that corresponds to the advertising jel l2 l81 m3 a firm s current advertising is generally associated with an increase in its sales but this effect is generally short lived

a tear in the iron curtain the impact of western television on consumption behavior this paper examines the impact of exposure to foreign media on the economic behavior of agents in a totalitarian regime we study private consumption choices focusing on former east germany where differential access to western television was determined by geographic features using data collected after the transition to a market economy we find no evidence of a significant impact of previous exposure to western television on aggregate consumption levels however exposure to western broadcasts affects the composition of consumption biasing choices in favor of categories of goods with high intensity of pre reunification advertisement the effects vanish by 1998

detailing vs direct to consumer advertising in the prescription pharmaceutical industry the pharmaceutical industry has always used sales representatives to target physicians detailing who are a key link in sales and market share for prescription pharmaceuticals since august of 1997 when the food and drug administration eased the restrictions on direct to consumer advertising dtca there has been a dramatic increase in the use of dtca by pharmaceutical firms to target end customers patients dtca seems to have two different effects on pharmaceutical markets the first is to inform patients about the availability of drugs for some ailments thus expanding the market constructive the second is to persuade patients to talk about specific brands when they meet physicians with the objective of influencing market share combative we consider both effects of dtca in the presence of a detailing program in a competitive environment we incorporate the dynamics of physician patient interaction in a game theoretic model where firms decide on the form of dtca to adopt constructive or combative and then compete in the marketplace by choosing detailing and dtca levels we answer four questions what is the impact of adopting dtca on competitive intensity how do optimal detailing levels for a firm change with the adoption of dtca how should the dtca strategy for a firm vary depending on whether it is stronger or weaker in its degree of influence in the physician s office finally under what conditions would competing firms voluntarily decide to pursue constructive dtca

advertising restrictions and competition in the children s breakfast cereal industry abstract in this article i analyze the consequences of advertising in the children s breakfast cereal market i take advantage of the prohibition on advertising directed at children in the province of quebec to examine the nature of advertising and to determine whether the restriction hinders competition i show that prices are higher in quebec than in canadian provinces that permit advertising this finding suggests that the informative role of advertising dominates any persuasive role since the most likely explanation is that the restriction prevented firms from announcing products existence or characteristics and thus from overcoming perceived differentiation if advertising is informative restricting it should increase the market shares of older better known brands and decrease the market shares of newer and or less well known brands empirical analysis supports this prediction market shares of established brands are larger in quebec than in the rest of canada and the opposite is true for nonest

pure strategy nash equilibria in an advertising game with interference abstract two manufacturers produce substitutable goods for a homogeneous market the advertising efforts of the two manufacturers determine the demand for the goods and interfere negatively with each other the demand of each good is a piecewise linear function of the product goodwill and the latter is a linear function of advertising efforts in a game with two competing profit maximizing manufacturers who have access to a set of several advertising media the pure strategy nash equilibria are characterized and their existence is shown

appropriating signs and meaning the elusive economics of trademark this paper deals with economic analysis of trademark its presence in markets is originally connected with the problem of information asymmetries and the need to provide information for assisting exchanges so as to avert the market failure brought about by adverse selection however this information conveying function is also accompanied by a differentiation effect arising from the power of persuasion that signs can exert on individuals the exploitation of differentiation has given rise to the practice of branding which ties markets and consumption to the realms of meaning and experience branding is so all pervasive in today s economy as to have somehow transfigured it so that the role of persuasion is now pre eminent nonetheless the mainstream economic theory tends to resist acknowledging this change which would to a large extent call into question well established hypotheses and theoretical tools the general response has therefore been to assume that the informational role of trademark predominates and to use this hypothesis to construct models welfare evaluations and policy prescriptions that bear little or no relation to the actual markets the opposing approach in the shadow of the nelson s and arrow s seminal papers on economics of information is recognising the idiosyncratic character of information and therefore drawing conclusions and devising solutions that while still based upon the welfare criterion also incorporate a wider awareness and a deeper representation of the scenario under study the present work attempts to move in this direction showing how different disciplines can provide some key epistemological tools for enabling economists to effectively evaluate the welfare outcomes of the introduction and progressive alteration of a particular intellectual property right within the realm of signs and meanings

an economy of scales a selective review of obesity s economic causes consequences and solutions this paper reviews the economic research on obesity covering topics such as the measurement of and trends in obesity the economic causes of obesity e g the monetary price and time cost of food food assistance programs income education macroeconomic conditions and peer effects and the economic consequences of obesity e g lower wages a lower probability of employment and higher medical care costs it also examines the extent to which obesity imposes negative externalities and economic interventions that could potentially internalize such externalities such as food taxes subsidies for school based physical activity programs and financial rewards for weight loss it discusses other economic rationales for government intervention with respect to obesity such as imperfect information time inconsistent preferences and irrational behavior it concludes by proposing a research agenda for the field overall the evidence suggests that there is no single dominant economic cause of obesity a wide variety of factors may contribute a modest amount to the risk there is consistent evidence regarding the economic consequences of obesity which are lower wages and higher medical care costs that impose negative externalities through health insurance studies of economic approaches to preventing obesity such as menu labeling taxes on energy dense foods and financial rewards for weight loss find only modest effects on weight and thus a range of policies may be necessary to have a substantial effect on the prevalence of obesity

the causes of childhood obesity a survey childhood obesity rates are rapidly rising in many countries since it is highly likely that obesity will persist into adulthood current rates undermine the health and future of people in developed as well as developing countries this public health epidemic carries significant economic social as well as individual level consequences and has become a research topic of significant interest for various disciplines including economics we survey the literature in economics and related disciplines associated with the causes of childhood obesity and synthesize the results to provide a better understanding of the explanations for the rising childhood obesity rates this is an important step in crafting effective policies to combat global childhood obesity trends

will farmers trade profits for stewardship heterogeneous motivations for farm practice selection we investigate the trade off agricultural producers face between profits and stewardly activities when selecting farm practices instead of the profit maximization framework we model producer behavior in an expanded utility framework built on production technology and including two utility components self and social interests the framework introduces inherent heterogeneity and social environmental motivations into farmer behavior based on this model we hypothesize that there are farmers that are willing to forego some profit to engage in stewardly farm practices with an empirical study we provide evidence that some farmers are willing to make this sacrifice results are consistent with the multi utility hypothesis

how are preferences revealed revealed preferences are tastes that rationalize an economic agent s observed actions normative preferences represent the agent s actual interests it sometimes makes sense to assume that revealed preferences are identical to normative preferences but there are many cases where this assumption is violated we identify five factors that increase the likelihood of a disparity between revealed preferences and normative preferences passive choice complexity limited personal experience third party marketing and intertemporal choice we then discuss six approaches that jointly contribute to the identification of normative preferences structural estimation active decisions asymptotic choice aggregated revealed preferences reported preferences and informed preferences each of these approaches uses consumer behavior to infer some property of normative preferences without equating revealed and normative preferences we illustrate these issues with evidence from savings and investment outcomes

the effects of soft drink taxes on child and adolescent consumption and weight outcomes abstract childhood and adolescent obesity is associated with serious adverse lifetime health consequences and its prevalence has increased rapidly soft drink consumption has also expanded rapidly so much so that soft drinks are currently the largest single contributors to energy intake in this paper we investigate the potential for soft drink taxes to combat rising levels of child and adolescent obesity through a reduction in consumption our results based on state soft drink sales and excise tax information between 1989 and 2006 and the national health examination and nutrition survey suggest that soft drink taxation as currently practiced in the united states leads to a moderate reduction in soft drink consumption by children and adolescents however we show that this reduction in soda consumption is completely offset by increases in consumption of other high calorie drinks

advertising s elusive economic rationale public policy and taxation advertising and its effects have been debated for well over a century in the last fewdecades a generally sceptical view of the benefits of advertising has been overturned by a series ofacademic advances in economics that detail a variety of ways in which advertising may affect theeconomy and society this academic work has however been paralleled by a growing popular andpolitical opposition to advertising and its social effects in this paper the positive economic case foradvertising is challenged by an assessment of the main channels of its influence and by a review ofthe associated empirical findings on its economic and wider impact a policy response of limitingthe tax deductibility of business advertising is explored

firm value in commonly uncertain times the divergent effects of corporate governance and csr economic uncertainty disrupts firms ability to create value most related literature examines how various organizational characteristics affect value under extreme conditions the global financia

exposure to foreign media and changes in cultural traits evidence from naming patterns in france abstract free trade in audio visual services has faced opposition on the grounds that foreign media undermine domestic culture and ultimately global diversity using a long panel of french birth registries we assess the media culture link using name frequencies as a measure of tastes controlling for the number of people who currently have a name and unobserved name effects our regressions show that media influences choices via selective imitation parents are much more likely to adopt media names that they associate with youth using estimated parameters we simulate our model of name choice to reveal that absent foreign media fewer than 5 of french babies would have been named differently our simulations also suggest a positive effect of foreign media on the welfare of parents

environmental policy when pollutive consumption is sensitive to advertising norms versus status a theoretical model is developed to analyse optimal environmental policy when consumer preferences are endogenous it captures that pollutive consumption is sensitive to consumption by others and commercial advertising this is conceptualized through a consumption norm an increase in this norm means that consumers will become dissatisfied with a given consumption level and try to raise it which will cause an increase in pollution the model is particularly relevant for the study of conspicuous consumption which generally is subject to concentrated advertising efforts while it generates considerable pollution the model can accommodate the cases of an externality created by advertising being positive or negative we also show that using different functional specifications for the norm function one can address either conformity or status seeking we derive optimal rules for a pollution tax a subsidy or tax on advertising and information provision by the government the results not only contribute to more realism in environmental policy theory but also extend public policy with new instruments

gary becker as teacher this paper looks at the work of gary s becker american economist professor of sociology friend and colleague of kevin m murphy murphy discusses the traditional approach of becker s teaching and ideas as they were expressed through his wealth of content and style in course design his discussions on the role of preferences technology and constraints as they influence household production and his emphasis on the importance of markets and desire for more murphy recognizes becker s teaching style as groundbreaking unapologetic and pure economics

the effects of direct to consumer advertising of pharmaceuticals on adherence we evaluate the effect of direct to consumer dtc advertising on adherence to the standard drug regimen for treating high cholesterol statins we use a rich panel data set from an insurance firm that includes all prescription drug purchases and insurance claims from 1997 to 2002 the data include the relevant demographic variables including income we match this data with unique data from nielsen monitor plus on monthly dtc advertising expenditures by therapeutic category for all media types the research strategy identifies individuals who have been diagnosed with specific chronic conditions and tracks whether adherence as measured by purchases of specific prescription drugs within designated therapeutic classes can be explained in part by the level and type of dtc advertising to which the individual was potentially exposed income has a positive effect on adherence we find that advertising has a small negative effect on the average level of adherence we find some suggestive evidence that this is b

advertising price and welfare evidence from the u s brewing industry the welfare effect of advertising has been a subject of controversy among economists for some time one obvious concern is simply the cost of advertising in 1990 for example americans spent 130 1 billion on advertising to put this figure into perspective this amounted to 523 per capita 2 35 percent of gross national product and roughly 80 percent of the national deficit 1 much of the early debate regarding the social desirability of advertising stems from different preconceptions regarding its purpose 13 14 8 49 for example according to the kaldor 29 hypothesis advertising is primarily persuasive or deceptive in nature it changes consumer preferences creates brand loyalty and persuades consumers to favor commodities that they did not previously desire an opinion survey by bauer and greyser 5 indicates that consumers believe that much of advertising is persuasive and greyser and reece 27 158 find that 85 percent of the over 2 700 harvard business review subscribers surveyed believe that advertising persuades people to buy things they do not need if advertising is purely deceptive then it can be classified as a bad and reduces welfare

separating the likelihood and timing of bank failure abstract we use a split population survival time model to separate the determinants of bank failure from the factors influencing the survival time of failing banks basic indicators of a bank s condition such as capital troubled assets and net income are important in explaining the timing of bank failure however many of the other variables typically included in bank failure models such as measures of bank liquidity are not associated with the time to failure the results also suggest that the closure of large banks is not delayed relative to the closure of small banks

do effects of theoretical training and rewards for energy efficient behavior persist over time and interact a natural field experiment on eco driving in a company fleet abstract increasing energy efficiency is a cornerstone of policy initiatives to tackle climate change and increase corporate sustainability convincing people to drive more fuel efficiently eco driving is often an integral part of these approaches especially in the transport sector but there is a lack of studies on the long term persistence and potential interaction of the effects of incentives and training on energy conservation behavior in general and eco driving behavior in particular we address this gap with a twelve months long natural field experiment in a logistics company to analyze the time dependent and potentially interacting effects of rewards and theoretical training for eco driving on fuel consumption in a real world setting we find an immediate reduction of fuel consumption following the introduction of a non monetary reward and an attenuation of this effect over time theoretical eco driving training shows no effect neither short term nor long term highlighting the often neglected necessity to include practical training elements contrary to common assumptions the interaction of incentives and theoretical training does not show an additional reduction effect our results demonstrate the difficulty of changing engrained behavior and habits and underline the need for a careful selection and combination of interventions policy implications for public and private actors are discussed