Comments on the Impact of Advertising on the Price of Consumer Products” (Farris and Albion, JM, Summer 1980)

Abstract

In their survey on whether advertising increases prices, Farris and Albion fail to understand that those who argue that advertising increases prices lack both theory and facts. Consumers benefit from advertising because advertising lowers the costs of information about brand qualities and reduces the average price per unit of quality. They also fail to recognize that Steiner's dual stage model is inconsistent with the theory of derived demand.