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Estimating the Value of Advertising

Author

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  • Dewenter, Ralf

    (Helmut Schmidt University, Hamburg)

Abstract

Mass-medias 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 modelled simultaneously using 2SLS techniques.

Suggested Citation

  • Dewenter, Ralf, 2003. "Estimating the Value of Advertising," Working Paper 12/2003, Helmut Schmidt University, Hamburg.
    • Handle: RePEc:ris:vhsuwp:2003_012
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    More about this item

    Keywords

    Mass-Media; Magazines; Hedonic Prices; Box-Cox Approach;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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