The Effects of Banning Advertising in Junk Food Markets

68 Pages Posted: 13 Jun 2016

See all articles by Pierre Dubois

Pierre Dubois

University of Toulouse 1 - Toulouse School of Economics (TSE)

Rachel Griffith

Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)

Martin O'Connell

Institute for Fiscal Studies (IFS)

Date Written: June 2016

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.

Keywords: advertising, Demand estimation, dynamic oligopoly, welfare

JEL Classification: L13, M37

Suggested Citation

Dubois, Pierre and Griffith, Rachel and O'Connell, Martin, The Effects of Banning Advertising in Junk Food Markets (June 2016). CEPR Discussion Paper No. DP11316. Available at SSRN: https://ssrn.com/abstract=2795079

Pierre Dubois (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Rachel Griffith

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London WC1E 7AE
United Kingdom
+44 20 7291 4800 (Phone)
+44 20 7323 4780 (Fax)

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://www.ifs.org.uk/people/profile?id=37

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Martin O'Connell

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

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