The Sales and Competitive Effects of Styling and Advertising Practices in the U.S. Auto Industry

Kwoka, John E,

The Review of Economics and Statistics, 1993, vol. 75, issue 4, 649-56

Abstract: This paper utilizes a detailed data set on most U.S. car models over a twenty-two-year period to determine the impact of advertising and product styling. It finds that, while advertising and style change each increases a model's sales, advertising is short-lived but styling has a much longer impact. Rivals' styling reduces own-model sales to the point that the overall market effect is self-canceling. Rivals' advertising, by contrast, does not greatly affect own sales, so that marketwide advertising does increase total sales. These results add several twists to previous analyses of this industry. Copyright 1993 by MIT Press.

Date: 1993
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