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dc.contributor.authorGoeree, Michelle S.en
dc.date.accessioned2009-01-29T16:04:42Z-
dc.date.available2009-01-29T16:04:42Z-
dc.date.issued2004-
dc.identifier.urihttp://hdl.handle.net/10419/23396-
dc.description.abstractTraditional models of consumer choice assume consumers are aware of all products for sale. This assumption is questionable, especially when applied to markets characterized by a high degree of change, such as the personal computer (PC) industry. I present an empirical discrete-choice model of limited information on the part of consumers, where advertising influences the set of products from which consumers choose to purchase. Multi-product firms choose prices and advertising in each medium to maximize their profits. I apply the model to the US PC market, in which advertising expenditures are over $2 billion annually. The estimation technique incorporates macro and micro data from three sources. Estimated median industry markups are 19% over production costs. The high industry markups are explained in part by the fact that consumers know only some of the products for sale. Indeed estimates from traditional consumer choice models predict median markups of onefourth this magnitude. I find that product-specific demand curves are biased towards being too elastic under traditional models of consumer choice. The estimates suggest that PC firms use advertising media to target high-income households, that there are returns to scope in group advertising, and that word-of-mouth or experience plays a role in informing consumers. The top firms engage in higher than average advertising and earn higher than average markups.en
dc.language.isoengen
dc.publisher|aClaremont McKenna College, Department of Economics |cClaremont, CAen
dc.relation.ispartofseries|aClaremont Colleges Working Papers |x2004-09en
dc.subject.jelL15en
dc.subject.jelL63en
dc.subject.jelM37en
dc.subject.jelD21en
dc.subject.jelD12en
dc.subject.ddc330en
dc.subject.keywordAdvertisingen
dc.subject.keywordinformationen
dc.subject.keyworddiscrete choice modelsen
dc.subject.keywordproduct differentiationen
dc.subject.keywordpersonal computer industryen
dc.subject.stwPC-Industrieen
dc.subject.stwWerbungen
dc.subject.stwPreiselastizitäten
dc.subject.stwKonsumentenverhaltenen
dc.subject.stwProduktdifferenzierungen
dc.subject.stwDiskrete Entscheidungen
dc.subject.stwVereinigte Staatenen
dc.titleAdvertising in the U.S. Personal Computer Industry-
dc.typeWorking Paperen
dc.identifier.ppn47932882Xen
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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