The Impact of Advertising Regulation on Industry - The Cigarette Advertising Ban of 1971

Shi Qi

No 868, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops and estimates a dynamic oligopoly model of advertising in the cigarette industry. With this estimated model, I evaluate the impact of the 1971 TV/Radio advertising ban on the cigarette industry. A puzzling fact about this ban is that, while industry advertising spending decreased sharply immediately following its passage, spending then recovered and actually exceeded its pre-ban level within five years. While simple static models cannot account for such a turn of events, the rich dynamic model developed in this paper can. This paper exploits previously confidential micro data, now made public through tobacco litigation. In addition, the paper uses a new concept of Oblivious Equilibrium to handle intractable state space and accelerate equilibrium computation.

Date: 2011
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Citations: View citations in EconPapers (3)

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Journal Article: The impact of advertising regulation on industry: the cigarette advertising ban of 1971 (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:868

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