Is the Dorfman-Steiner Rule Always Optimal?

Stacey Brook

The American Economist, 2005, vol. 49, issue 2, 75-77

Abstract: Common economic wisdom states that the Dorfman-Steiner advertising rule must be met for profit maximization with respect to advertising effort, and either quantity or price. This is true given that the demand equation is not independent with respect to advertising and price or quantity (inverse demand equation). In other words, using an independent linear demand specification the Dorfman-Steiner rule is an identity and thus always holds even with output levels off the equilibrium path.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:49:y:2005:i:2:p:75-77

DOI: 10.1177/056943450504900209

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