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Advertising and Restrictions in the Cigarette Industry: Evidence of State‐by‐State Variation
Author(s) -
Gallet Craig A.
Publication year - 2003
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/byg015
Subject(s) - advertising , consumption (sociology) , economics , market power , supply and demand , tobacco industry , perspective (graphical) , state (computer science) , business , microeconomics , social science , algorithm , artificial intelligence , sociology , political science , computer science , law , monopoly
Many studies estimate the relationship between advertising and consumption in the cigarette industry, with emphasis directed toward the national demand for cigarettes. However, in light of evidence that cigarette producers price discriminate across U.S. states, coupled with possible affects of advertising on market power, this article takes a less aggregate perspective by addressing the role of cigarette advertising and restrictions at the state level. The results show that although advertising has little effect on demand, it generally increases market power in the cigarette industry (particularly during periods of heightened advertising restrictions). Furthermore, the relationship between advertising, demand, and supply vary across states. (JEL L13 , L66 , I18 )