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Intermedia Substitutability and Market Demand by National Advertisers

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  • Alvin J. Silk
  • Lisa R. Klein
  • Ernst R. Berndt

Abstract

We assess substitutable and complementary relationships among eight national advertising media classes, as well as the magnitude of their own-price elasticities. We use a translog demand model, whose parameters we estimate by three-stage least squares, based on 1960-94 annual U.S. data.We find aggregate demand by national advertisers for each of the eight media is own-price inelastic, and that cross-price elasticities suggest slightly more substitute than complementary relationships, although both are rather weak. These patterns are consistent with long prevailing institutional arrangements and media selection practices.

Suggested Citation

  • Alvin J. Silk & Lisa R. Klein & Ernst R. Berndt, 2001. "Intermedia Substitutability and Market Demand by National Advertisers," NBER Working Papers 8624, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8624
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    1. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    2. Nelson, Phillip J, 1975. "The Economic Consequences of Advertising," The Journal of Business, University of Chicago Press, vol. 48(2), pages 213-241, April.
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    Cited by:

    1. Gambaro, Marco & Puglisi, Riccardo, 2013. "Complement or substitute? The internet as an advertising channel, evidence on advertisers on the Italian market, 2005-2009," 24th European Regional ITS Conference, Florence 2013 88464, International Telecommunications Society (ITS).
    2. Marco GAMBARO & Riccardo PUGLISI, 2012. "Complement or substitute? The internet as an advertising channel, evidence on advertisers on the Italian market, 2004-2009," Departmental Working Papers 2012-11, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Evan Kwerel & Johathan Levy & Robert Pepper & David Sappington & Donald Stockdale & John Williams, 2002. "Economic Issues at the Federal Communications Commission," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(4), pages 337-356, December.
    4. Alvin Silk & Lisa Klein & Ernst Berndt, 2002. "Intermedia Substitutability and Market Demand by National Advertisers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(4), pages 323-348, June.

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    JEL classification:

    • D0 - Microeconomics - - General
    • L8 - Industrial Organization - - Industry Studies: Services

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