Overview

This accessible and comprehensive textbook explores the role of advertising in the marketplace. It investigates how firms' advertising strategies are informative, persuasive or add value to the product advertised. The book explains in detail empirical methodologies used to identify the impact of advertising on consumer demand and on market structure, and reviews some recent empirical findings. It concludes with an in-depth exploration of digital advertising and auctions along with a framework for current antitrust investigations into two-sided platforms (Google, Facebook) that are funded by advertising revenues. How advertising works in the marketplace, and whether it works well, is a complex question to address because there are three sets of players involved–the firms that advertise their products, the potential consumers who view the ads and the platform or medium that intermediates between them. Understanding how these three sets of players interact is the key to understanding the role of advertising in a market economy. The book begins by looking at the rise of advertising in market economies, a phenomenon not accounted for in standard textbook microeconomic models and carefully explains why. This is followed by an examination, both theoretical and empirical, of how firms strategically use advertising to reach consumers and expand the demand for their products. There are also chapters focused on the challenges of deceptive advertising and regulation. The final chapters investigate how two-sided platforms, such as Google and Facebook, are sustained by advertising revenues, and include a review of auction theory and the structure of advertising auction exchanges. These chapters also provide a detailed analysis of public policy issues, including media bias and antitrust concerns. While designed for use by students in any course that covers the economics of advertising, this book is also an excellent resource for any reader interested in a deeper understanding of this important topic.

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9781788978132

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Reviews

'Advertising and the Marketplace: An Economics Perspective by Pepall and Richards is a fully comprehensive, incredibly careful, and long-overdue economic study of advertising. It covers substance and methodology, theory and empirics, policy and examplesBall with the readability and flair we expect from two prominent economists who have long studied this topic. It should be read by all industrial organization economists and students, but also those in business schools, public policy programs, and other disciplines interested in, and sometimes concerned with, the impact of advertising on economic and social life.' -- John Kwoka, Northeastern University, US

'This topical text bridges economics and marketing and broaches the new economics of platforms too, expounding both theory and empirics at an upper-year undergraduate level. It covers seminal contributions from the classics to the most recent in this vibrant, evolving, and increasingly important field.' - Simon P. Anderson, University of Virginia, US 'Economics has, over the last few decades, increasingly ceded the study of advertising to the field of marketing. This excellent text by Pepall and Richards is once again staking a claim for economics and its particular methodology on this important territory. I expect it to become a classic.' - Sara Fisher Ellison, Massachusetts Institute of Technology, US 'Advertising and the Marketplace: An Economics Perspective by Pepall and Richards is a fully comprehensive, incredibly careful, and long-overdue economic study of advertising. It covers substance and methodology, theory and empirics, policy and examplesBall with the readability and flair we expect from two prominent economists who have long studied this topic. It should be read by all industrial organization economists and students, but also those in business schools, public policy programs, and other disciplines interested in, and sometimes concerned with, the impact of advertising on economic and social life.' - John Kwoka, Northeastern University, US

Author Information

Lynne Pepall and Dan Richards, Professors of Economics, Department of Economics, Tufts University, US

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