Overpricing, Market Outcomes, Advertising Effectiveness

Moritz Lukas, Vito Mollica, Markus Nöth and Stefan Truck

ERES from European Real Estate Society (ERES)

Abstract: This study investigates whether and to what extent the effectiveness of advertising is limited by overpricing of the advertised good. Using a unique dataset from the Australian residential property market, we find that 1) advertising is effective in increasing a property’s sale hazard and 2) advertising effectiveness is significantly reduced by overpricing. The monotonous decrease of advertising effectiveness with the extent of overpricing suggests that potential buyers are aware of the existence and the extent of overpricing. These patterns cannot be explained with absolute price levels and shed new light on the effectiveness of advertising relative to pricing aspects.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2016-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2016_210

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