Denmark, Aarhus

Economics of Advertising

when 4 July 2011 - 22 July 2011
duration 3 weeks
credits 5 EC

Advertising is ubiquitous in markets. The aim of this course is to undertake a critical assessment of the role and effects of adverting in the marketplace. This will be accomplished by applying economic theory and evaluating empirical evidence to understand economics’ different views of advertising, to assess the welfare (social) consequences of advertising and to evaluate firms’ advertising decisions. Course offered by Department of Business studies, Aarhus School of Business, AU.

Course leader

Garry Ferrier, University of Arkansas

Target group

A course in microeconomics. While the basic economic concepts used in the course will be reviewed at the beginning of the term, students should have an understanding of basic microeconomics. These concepts include the fundamental notion of scarcity, the law of demand, market analysis using demand and supply, price elasticity of demand, market power, consumer surplus, and product surplus.

Course aim

By the end of the course, students will be able to:
• Explain the persuasive, informative, and complementary roles of advertising.
• Critically debate the effect of advertising on social well-being.
• Formulate the profit-maximizing level of advertising, contrasting the roles of price elasticity and shifts in demand.
• Assess the multiple effects of advertising in the marketplace.
• Employ supply and demand analysis to analyze the effects of advertising on price, quantity, and price elasticity.
• Contrast the effectiveness of advertising in “information-poor” and “information-rich” economies.
• Estimate the duration of advertising’s impact on sales.
• Differentiate between “constructive” advertising and “combative” advertising.
• Use game theory to demonstrate why firms may engage in excessive advertising.
• Assess the rationales for regulating advertising.
• Evaluate the benefit of advertising in various media.
• Critically interpret news stories on advertising.
• Analyze the competitive and public policy aspects of advertising in particular markets.

Fee info

EUR 0: See website for information regarding fees