ADVERTISING IN DEMAND SYSTEMS FOR ALCOHOLIC DRINKS AND TOBACCO - A COMPARATIVE-STUDY

This paper is concerned with the effect of advertising on the interpro duct distribution of demand. For that purpose, it examines different w ays of incorporating advertising terms into the Rotterdam model and in to static and dynamic versions of the Almost Ideal Demand System. In a n empirical application to data for the alcoholic drinks and tobacco m arkets in the United Kingdom, it is concluded that aggregate advertisi ng appears to have had little or no effect upon product demand in this sector over the past three decades. The scope for restraining consump tion of these products through advertising bans may be negligible.