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Is Advertising a Good or a Bad? Evidence from U.S. Magazine Subscriptions

2004; University of Chicago Press; Volume: 77; Issue: S2 Linguagem: Inglês

10.1086/381519

1537-5374

Craig A. Depken, Dennis Wilson,

Merger and Competition Analysis

This article investigates whether advertising has a beneficial or deleterious impact on the demand for magazine subscriptions. Specifically, we test whether the demand for magazines indicates if consumers consider advertising a “bad” or a “good.” Using data describing 95 U.S. magazines for the years 1996–98 we find that advertising substituted for editorial content reduces both the quantity and price of magazine subscriptions. However, the full impact of additonal advertising on subscription price and quantity is tied to the percentage of a magazine dedicated to advertising. We show how this ambiguity is reflected in the magazines included in our sample.