Should Utility-Reducing Media Advertising be Taxed?
Publikation: Working paper › Forskning
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Should Utility-Reducing Media Advertising be Taxed? / Kind, Hans Jarle; Köthenbürger, Marko; Schjelderup, Guttorm.
Munich, 2009.Publikation: Working paper › Forskning
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TY - UNPB
T1 - Should Utility-Reducing Media Advertising be Taxed?
AU - Kind, Hans Jarle
AU - Köthenbürger, Marko
AU - Schjelderup, Guttorm
N1 - JEL classification: D40, D43, H21, H22, L13
PY - 2009
Y1 - 2009
N2 - Empirical evidence suggests that people dislike ads in media products like TV programs. In such situations standard economic theory prescribes that the advertising volume can be optimally reduced by levying a tax on ads. However, making use of recent advances in the theory of Industrial Organization and two-sided markets we show that taxing ads may be counterproductive. In particular, we identify a number of situations in which ad-adverse consumers are negatively affected by the tax, and we even show that the tax may lead to higher ad volumes. This unorthodox reaction to a tax may arise when consumers significantly dislike ads, i.e. in situations where traditional arguments for corrective taxes are strongest.
AB - Empirical evidence suggests that people dislike ads in media products like TV programs. In such situations standard economic theory prescribes that the advertising volume can be optimally reduced by levying a tax on ads. However, making use of recent advances in the theory of Industrial Organization and two-sided markets we show that taxing ads may be counterproductive. In particular, we identify a number of situations in which ad-adverse consumers are negatively affected by the tax, and we even show that the tax may lead to higher ad volumes. This unorthodox reaction to a tax may arise when consumers significantly dislike ads, i.e. in situations where traditional arguments for corrective taxes are strongest.
KW - Faculty of Social Sciences
KW - two-sided markets
KW - media market
KW - pricing strategy
KW - ad-tax
M3 - Working paper
BT - Should Utility-Reducing Media Advertising be Taxed?
CY - Munich
ER -
ID: 14249847