Advertising in demand systems for alcoholic drinks and tobacco: A comparative study

Listed in:

• Analysis of aggregate data
• Tax and price in HICs
• Impact of tax on tobacco use
• Theoretical frameworks
• Aggregate demand for tobacco products

Abstract

This paper is concerned with the effect of advertising on the interproduct distribution of demand. For that purpose, it examines different ways of incorporating advertising terms into the Rotterdam model and into static and dynamic versions of the Almost Ideal Demand System. In an empirical application to data for the alcoholic drinks and tobacco markets in the United Kingdom, it is concluded that aggregate advertising appears to have had little or no effect upon product demand in this sector over the past three decades. The scope for restraining consumption of these products through advertising bans may be negligible.