The Effect of Government Advertising Policies on the Market Power of Cigarette Firms

Shilpi Bihari and Barry Seldon ()

Review of Industrial Organization, 2006, vol. 28, issue 3, 229 pages

Abstract: We estimate market power among cigarette manufacturers over 1952–1984, a period of uniform pricing. We apply the Bresnahan approach; adjust it to the firm level; employ a dynamic model with habit persistence; and add an advertising equation, which helps identify the parameters, increase degrees of freedom, and constrain parameters so we can interpret our results at the firm level, despite the fact that the equations conform to what we might see in a market model. We consider effects of government interventions upon demand and market power and find, for instance, that the 1971 broadcast advertising ban decreased market power. Copyright Springer 2006

Keywords: Advertising policies; broadcast advertising ban; cigarettes; market power; JEL classification; L1; L51; L66; M37 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:revind:v:28:y:2006:i:3:p:201-229

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DOI: 10.1007/s11151-006-0019-3

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