Advertising Effect on Primary Demand: a Cointegration Approach

G Tassinari and G Cavaliere

This paper addresses the question of the effects of advertising on the primary demand for whisky in Italy.

Advertising Effect on Primary Demand: a Cointegration Approach

Giuseppe Cavaliere andGiorgio Tassinari Department of Statistical Sciences, University of Bologna

INTRODUCTION

Profitmaximising firms advertise in order to increase the demand for the goods they produce. Hence we would expect increases in a firms advertising to be associated with increases in sales of the firms product (the socalled secondary demand effect, see Schultz and Wittink, 1976). Higher demand for the firms goods may or may not be associated with a lower demand for its competitors goods (competitive effect). At the market level, an increase in advertising may or may...

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