Does Government-sponsored Advertising Increase Social Welfare? A Theoretical and Empirical Investigation
Carlos Carpio () and
Applied Economic Perspectives and Policy, 2016, vol. 38, issue 2, 239-259
The main objective of this study was to analyze the effect of advertising on social welfare in a perfectly competitive market where the level of advertising is chosen by a social planner. The theoretical model revealed that social planner-sponsored advertising that increases the equilibrium price of the advertised good can increase society's welfare if the effect of advertising in consumers' utility is higher than the consumer welfare-reducing price effect. The empirical illustration focuses on the U.S. state of South Carolina's "buy local" food products campaign. The findings suggest that this government-sponsored advertising campaign increases total welfare.
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Working Paper: Does Government Sponsored Advertising Increase Social Welfare? A Theoretical and Empirical Investigation (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:apecpp:v:38:y:2016:i:2:p:239-259.
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