Seasonality and the Effect of Advertising on Price

24 Pages Posted: 31 Mar 2015

See all articles by David Genesove

David Genesove

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)

Avi Simhon

Hebrew University of Jerusalem

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Date Written: March 2015

Abstract

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 secondā€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.

Suggested Citation

Genesove, David and Simhon, Avi, Seasonality and the Effect of Advertising on Price (March 2015). The Journal of Industrial Economics, Vol. 63, Issue 1, pp. 199-222, 2015, Available at SSRN: https://ssrn.com/abstract=2587470 or http://dx.doi.org/10.1111/joie.12067

David Genesove (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3128 (Phone)
+972 2 581 6071 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Avi Simhon

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem 91905, Jerusalem 91905
Israel
+972 2 588 3237 (Phone)
+972 2 581 6071 (Fax)

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