The Economic Analysis of Advertising

My purpose here is to survey the literature of the economic analysis of advertising. In so doing, I hope to accomplish two objectives. A first objective is to organize the literature in a manner that clarifies what is known, bringing to the surface the more essential contributions. Second, I hope to clarify how this knowledge has been obtained. The economic implications of advertising are of undeniable importance; however, the true nature of these implications has yielded but slowly to economic analysis. There is a blessing in this. With every theoretical and empirical methodological innovation in industrial organization, economists have turned to important and unresolved issues in advertising, demonstrating the improvement that their new approach offers. Advertising therefore offers a resilient set of issues against which to chart the progress gained as industrial organization methods have evolved.