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Underestimating advertising: innovation and unpriced entertainment

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  • Leonard I. Nakamura

Abstract

Leonard Nakamura states that despite consumers? lack of respect for advertising, it nonetheless plays a significant role in the economy. For one thing, it helps consumers find out about new products, and new products have been rising in economic importance. It also plays a role in subsidizing broadcast entertainment and news programs. Ultimately, Nakamura shows that although advertising contributes to consumer welfare, its contribution is missing from our measures of output.

Suggested Citation

  • Leonard I. Nakamura, 2005. "Underestimating advertising: innovation and unpriced entertainment," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 21-29.
    • Handle: RePEc:fip:fedpbr:y:2005:i:q4:p:21-29
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    References listed on IDEAS

    as
    1. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
    2. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    3. Nicholas Kaldor, 1950. "The Economic Aspects of Advertising," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 18(1), pages 1-27.
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