Estimating the Value of Advertising
University FAF Economics Discussion Paper No. 12
31 Pages Posted: 5 Sep 2003
Date Written: June 2003
Mass media are characterized by at least two interrelated markets. Therefore, the media firm has to satisfy two interdependent demands, the demand for magazines and the demand for advertising. The utility of the readers is affected by the information of the editorial and the advertising share. The advertising customers in contrast, are interested in the quality and quantity of the target group. The present paper analyzes both the marginal willingness to pay of readers for advertising and the marginal willingness to pay of advertising customers for sociodemographic attributes of the readers. Using the hedonic price approach the shadow prices are calculated using simple OLS and the Box-Cox regressions. Subsequently, because of the interrelationship of the demands, both markets are modeled simultaneously using 2SLS techniques.
Keywords: Mass-media, magazines, hedonic prices, box-cox approach
JEL Classification: C21, D12, L82
Suggested Citation: Suggested Citation