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RJ Reynolds

William Barnes Vs. The American Tobacco Company. Seposition of W. Kip Viscusi.

Date: 25 Sep 1997
Length: 2599 pages
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Viscussi, W.K.
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z-1 1 C-O-N-F-I-D-E-N-T-I-A-L IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DSSTRICT OF PENNSYLVANIA CIVIL ACTION NO. 96CV-5943 1 WILLIAM BARNES, e al., 9 PlaintiEfs, ) 1 30 vs. Dep ost of THE AMERICAN INC et al TOBACCO COMPANY, ; . ) ) XIPVISCUSI ., ., - DefendanYS. 1 3 14 15 CONTINUED VIDEOTAPED DEPOSITION OF . KIP VISCUSI, Ph.D., a wftness called on behalf of che Plaintiffs, taken pursuant to the Fedezal. Rules of Civil P cedure, before Anne H. Bohan, Re9istered Diplomate AePOrter an6 Nocary Pvblic 1n and for 19 Offices the CommoawealCh of National Bcon of MassachusetCS omic ResearCh A , a the s, c One Main Street. Cambrid ge, MassachuseCCS ~ o 20 Thursday, Sep[ember 25, 199>, commencing at 8:36 21 22 23 24 25 waga & Spinelli (201) 992-4333
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2-2 2 C-O-N-F-I-D-6-N-T-I-A-L Appearances: BECNEL, LANDRY and BECNEL 106 W. SevenCh EtreeC, P.O. Drawer N, Resexve, LA ]0084 Hy: DANIEL E. BECN6L, JR., ESQ. ney, of counsel for che yla~ntiffs CLIMACO, CLIMACO, SEMINATORE, LEFNOWST2 fi GAROFOLI CO., L.P.A. Ninth Floor. The xa11e 6vilding, Cleveland. Ox 4413s By: XEITx VERNON. ESQ., neys, of caonsel for the plaintiffs 5 6 S DECHERT PRICE & RHOADS 4000 Bell Atlantic Tower ] Arch SCieet Phflatlelphfa, Pennsylvanfa 19303-2]93 By: JBFFAEY G. NEIL, ESQ. rtey, of < unsel fox te defendat Philip Norras DALLER GR6ENBERG s DIETRICN Valley Green Corporate Ceneer ]111 Valley Green Road Port Washington. PA 19034 Hy: 6ILE6N M. JOHNSON. ESQ. ney. of c sel Eor the defendant xCJ~ Reynolda Tobacco Company Also present: a D. Stone, Videographer National Video Reporters 310 Fzanklin 5 Suite 243 Boston. Massachusetts o2130 Naga & Bpinelli (201) 992-4111
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2-6 those reports, did you? Q. You did not vnterpret those reports, did you? MR. WEIL: Objec[ion. Vague and ambiguous. . A. I don't know what that question means. p. well, have you read each and every one of those journal ar[vc1ES? A. I've actually read most of them. Q. But not all of [hem? A. Not all of them. p. And can you te11 us which ones you did read and which ones you didn`t read? MR. WESL: You wanC him Co go [Trough CTe beoks? M0.. BECNEL: Yes. A. well, let m use my smoking book too as a ieferen<e, slnce I didn't read all of them for rhis case. A lot of them vere read for my amokiny book. p. well -- A. I'11 go through them, and we'11 see vhich ones I have read prioi based on this, and I knnw whfch new ones I've read, and by proceas of 6 8 Waga & Spi-nelli (201) 992-4111
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z-5 iepresenting RJR. MR. WEIL: Jeff Weil repre5enting Che Philip Morrrs defendants vn Che Barnes THE WITNESS: And Kip Viscusi, the aeponenc. W. K1P VISCDSI, Ph.U., Resumed a wieness previously called for examanation by counsel for the Plafntiffs, having been prevvously duly sworn, was further examined and testified as follows: - DIRECT EXAMINATION, Continued BY MR. BSCNEL: Q. Dr. Vascusv, e hatl an opportunity to read the documentS known as V-2, V - 3 and V-4, which are compilation o£ documents you revveed for youz deposvtx0u, vs that corr¢ct. A. ThaC's c C. Q. Now, I noted that in the beginning of each one of those binders followed by a numbet of revvew artacies that these were report given to you by peopie from Natvonal Economics Research A6SOCiates; is tha[ correCt? A. Tha- coirecC. Q. A11 right. You didn't compile E Wa9a s Spinelli (201) 992-9111
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z-z eliminacion. Q. Well, I'm looking at those reports, svr, prepared for you. And it appears that a lot of chem were generated prior to 1984: ts that MR. WEIL: The reporta or arcicles. MR. 6ECNEL: The reports. A. They're different cime periodse some we[e in the for example. MR. WEIL: I m going to object, oecause x m-noc sur.. hac you mean by repores." MR. BECNEL: Let me go through them and we'11 cover chem each. Q. Let's starc out wich v-z. ... has youz zepo e, vs that correct, v n-page reporc? A. Yes. QQ lt's unsigned; is that cozrect? A. That vezeion ia. I have signed a copy that somebody has somewheze. - Q. A11 right. You didn't type this up, did you? A. xo, I did noc. Q. who typed it up? A. SC was half cypeC by me with E-mail and B 8 Wa9a 6 Spinell-i~-(201) 993-4111
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2-4 P R o C E E D I N c S THE VIDEOGRAPHER: We are going on [he record, and the tame as E:J6 a.m. This is the videO deposicion of Dr. W. Kip Viscusi taken by the plaintiff in the matter of William earnes, et ai., versus The American Tobacco Company, Inc., et al., under the jurisdictiOn of the United Scates District Court for the £aacern District of Pennsylvania, Civil Action No. 96CV-59o3. This deposition ia being held at the National Economic Research Assocration, One Main St[eet,Cambridge, Maseachusetts, on September 25, 1997. My name rs Laura Stone, and I am the video specialist. The court reporter is Anne Bohan. We are from Doris O. Vong Assocrates with offices located at 50 Prankiin Street, eoston, Massa-setts. Counsel wi11 now state Cheir appearance for the record and the court reporter will svear vn che wltness. _ MR. HECN£L: Daniel £. Becnel, Jr., repzesenting the Plainciffs in the Earnes macter. MR. VeRNON: Xeith Vernon represencing the Plaintiffs. MS. JDHNSON: Eileen Johnson 3 5 6 I S Waga E Spinelli (201) 992-4111
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z-a half typed by D[. Michols. So I don`[ know if chere's any secretarles 1nv01ved: it was E-mail exchange that was downloadea. p. isn C 1C a fac[, sar, that the National Economic Reeazch Associa[es has an ongoing ontract with ehe tobacc0 lawyexs and/or che inaastry? MR. YEI: objection. Lack of founaation, speculative. A. I don't knov of any ongoing contrac[s. o. Well, in looking at some Of these documen[s, the repozt says that they had prepared documents in regula[iona, Yor example, for cigare[te warn ng labels, foi mpacts of vorkpvace smoking reS[rvCCVOns. Were you aware of Cha[? MR. WEIL: Objection. Assumes facts not an evidence. a. These ar imply sectvon breakers for ar[xcles. Q, were you aware [hat [hey had prepared affidavits and submitted to varvous government agencies reports in the 'BOS and in the '0s, specifically 1994, dealing with xorkplace smoking restxictions and cigaret[e varnvng labels?' waga s spinelli (z01) 992-4111
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arranyemenes. Q. Nave you zead reports from them cortcerning cigarette warning labels? A. What axe you refe[[ing to? These documents here? Q. These documents, yes, sir. A. I read what is in these binders. I`ve read no ocher xERn reports, allhough I may have seen a wrvtten copy of Dr. Nichols' tectlmony at the OSNA hearfngs. Q. Tne ahaee binders Chat ve have listed as V-2, 3 and 4 aere not put together by yon, vere theyY A. Well, I commresroned them [o be put together, but I did notdo Xeroxing or putting the articles in the bintler. Q. Nor did you do the zesearch to get the axticles, did you. A. Tha- not true. Most of the asCicl¢s here are artlclea crted either in my smoking book or things that I requested. So cfie grezt majority of the things are things I specificaly rndicatefl. They augmented them witb other articles that they located in ehe literature based on a computer seaxcfi. 6 E Waga 6 Bpinel3i (201) 992-4111
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2-9 MR. WEIL: ODjection. MS. ~ONNSON: Objection. Form of ehe queseion. A. I vndicated yesteeday that I testified with Dr. Nichols, I believe at the hearing you're referring to, so that I don't think this is news. I mean, this is something I've already discussed. Q. Isn't it a fact that somebody else prepared che affidavits and you had nothing to do with the affiCavits? MR. W6IL: You'[e talking about the a£fiLavit rn this case. MR. SECNEL: in '94. A. I did not teatify on behalf of NERA, was not affiliated with NERA at that trme. Eo they had nothing to do wrth my affifiavit. Q. Ien't it a fact that NERA had an ongoing contz ual relationship as a consulting group to lawyer ss representing [he tobacco 3nteresC or the tobacco >nterest long before your , assoc>at>on vith them? MR. WEIL: objecCion Co the characcerization. A. Once again, I do not know that that .s the case. I do not know their centrxctual 6 7 25 Ya9a s Spinelli 12031 992-4111
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Q. Isn't it a fact, svr, Chat Be[nard keady end xick xichols are the people that did this work? MA. WEIL: Objectlon. A. I was the one who commasavoned them. They did not commvssvon this. I was Che one who indicated the Copics. They did not andicate the topics. I was the one who provided the list based In my smoking book and based In the working papers that I knew that wete out Chere that I did not yet have. aut after that happened, yes, they did the Xezozing, no.t me. Q. They puiled together and 9- you a synopsis of most of theae reporta, didn't they? A. They ditl. p. why, if you had already read this vnformatvon, did you nee9 Chem Co pull this work CogetM1er and give you a synopais of what the artvcle stated> • A. I vvew Cheir synopsis as pretty much analogous to what I did in my smoking book. Essentially, I prepazed a Cable in the smoking book summarazing elasticity estimates from dozens of studies. This is not the kind of thing wheze you go out and m orv2e the key results from 5 6 B Waga 6 Epinelli (201) 992-4331
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Q. why ia chat, s.r. 2-14 2 A. Hecause I m a special consultant wiCh NERA, and I was working wit o. Do you h them on this case, maintxin 11 office heree 5 p. Have y 6 here? ou ever malnt ained an office 8 A. No. Q. Do you 30 marntain a aecretary heze? l] Q. Ha.e y lz secretary here? on -e= main tainea a 13 A. No. Q. Do you mavntain an y adminisera tive assistants here? 16 p xave you ever mavneainea any y aaminiscrati- canca nere? 19 A. No. p. Are you aware of the computer _ 21 backup system that NERA nas? 22 A. No. I assume that in the computez wor ld 23 chey must have some backup system conceivably , but 24 I~m not aware of what they have. 25 Q. Do you knov what computer systems Wagz s Spinell-i(2011 992-41I1
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2-n3 Q. Did Nick Nichols and Bernard Reddy help wrate your ceport, sir. A. I had no input whaCSOevei from Bernard Reddy, and Nick NSCho1s only provided anformatlon regarding specific bibliogrxphic information that 1 did not have when I was at the Universicy of wyominy. q. Did you bill £or Bernard Reddy's tame as an expert witness? A. i didn'C do any bi111ng for Bernard Reddy. Whether NBRA billed him, i don`c know. Q. Did NSCk Nichols biii time through you, sar. A. Ne did not bill any time through me, but 1'm sure he has submitted bills. either for this case up to now, or he wiil submit bi11s. Q. Is it not a fact that all of the anformaCion Sv those binders, including your report, was done on NERA's stacaone[y? A. Hosc of it r just %eroxes of artacies; that's not anyEOdy's stationery. But all the memos an [hese binders are on NRRA•s ststionery. Q. Isn•t it a fact, sar, thaC your own report is on NBRA stationery? A. Yes. 6 B waga fi Spinelii (201) 9s2-9111
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2-12 dozens of studies in terms of parameter estimaces. eor example, che table you have ln front of you, nobody would memorize those statistics. So what they're doing is simply summarizing Che key elasticity estimate from a variety of studies. Q. They parcrcipated rn gathering information and 911, you a synopsis vhich you ultimately wr0te or helped write your report; is that not true? A. In terms of the timing, I wzote my report without re<eiving their synopses and wichouc see ng these binders. i based my repoit on articles that I had, they`re cited, as we11 as working papers, the poll results, et cetera. It's the only matezial I[eviewed up to that time. Q. Dr. viscusi, are you aware, si[, of your obligatlons in writing your expert report eo he court MR. WSIL: Objection. Q. 8ehically, your obligations. MR. WEIL: Objection. A. My obligation, as I percelve it, rs to tell the truth as i knov rt besed on my professionai experti9e. 6 Waga s Spinelli (201) 992-<111
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2 they used for the compilatiOn of documencs like this? A. No, I do not. MR. 6ECNfiL: Counsel, at this time we are going to request rmmediately, because of the involvement of Be[nard Reddy and Nick Nichols and the involvement of NERA, depositions, a 30(b)/s) deposition of xERA, and we are going to rnclu9e in that 30(b)(6) deposition the backup systems for the computers, the reseacch, the financial data, the financial relationship, the billing records an9 the like. And only because most of thvs macerial was prepared by these cwo gxntlemen rather than what we were told, chat the repores that we received were prepared by Dr. MR. WEIL: I vould ask that you put your request in iting. And as to responding to your speech, I think you have grossly mrscharacterized- Dr. Vrscusl s testimony. I think to the Contrary, ic s absOlutely clezr that Dr. Viscusi as responsible for and w[ote the report that has been enteeed in this case. I find it emazing that because- were so responsible as to give you all 5 6 8 (201) 992-4111 Waga s Splneili
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peitained to nis opfnfon in this case. So I think you have mvscharacterized grossly Di. Vrscusa s testlmony. And as I said, 1f you have something tha[ you want [o take up later on, senG i me vn wr~ting and we'll conaider vc. MR. BECNEL: All iight. Q. Let s go through the documents, svr, vn che repoet, Viscusi 3. And that is the September the 12th document. Nho prepared -- and 1C s not Bates numbered, nor a 1t page numbered, but we wi11 have a copy of that document made. And there a a report or a summation of a report dated September 32, 1997, ra there not. A. There is. Q. You did no prepare that document, 8 aid yoe2 No. Q. And who prepared that document? A. Dz. Albett Nichols, also knovn as Nick , Nicnols. Q. Is Dr. Nichols an expert designated in Chis courC pzoceeding2 A. I don't know if he ie or he isn t. Q. Nas he Cestified in tobacco waga 1 Spinelli~~(201) 992-4111
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these backup documents that were part of his book, part of his thinking, and parc of his ieport, that you are somehow or other penalizing us for giving you this masslve amovnt o[ documents. And I completely disagree with your characterization of how the report was put together. So put your request in writing and advisement. we'11 Cake it under MR MR. BECNSL: Counsel, I just know what the regulationa, the rules, and the law requires. The 1aw requires, for ezample, that no objections and vnstructions Co not ansve[ questione be pvt on che record. And if you look at the case managemenc order, you'11 see that. i did not fight with you when you chose to vrolate that case managemen[ order and cha[ depositlon proto<ol. The cour[ gave us rulea and regulacions; I'm jus[ C[ying [o follov them. we gave you a request for the production of documents, basically a subpoena , request, and I don't think you'ee under any obligation to do anything but what the Federal Rules require. And if this is your respanse under our request, chen I guess yov're trying to comply wiCh the Federa3 Rules and our request, and I 3 waga & Spineili(201) s92-9111
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commend you for that, wever, I was qui[e surprvsed vn ge trng these volumes oE vnformation to fina ou[ ehat there were others who participated. And I apologize if you think 3 m ignorant in terms of what you already know. But I've resd everything that was submitted yeseerday, and it s a far cry from what we were led to Delieve. So that`s the reason for the request. MR. WEIL: We11, I never seid you were ignorant. In fact, I do not think you re ignorant, Mr. Hecnel, I think you're a very vncelligent and shiewd lawyer. And as to your comment about following che [ules of the court, you, whether you like it or not, are not the judge in this case, and if you have a complaint about St, submit it to the judge. I also note for the recora that i[ rs your obligation to ask appropriate questiona at deposi[ions. In my v1ew, you have not done tha[., I decided cathet than terminate the dspOsition, whirh I had a right to do, I believe, for your harassing and sompletely inappropriate questioning, I allowed the deposition to cn.lnue so that you might get to questions that actual3y 5 6 B waga 6 Spine111 (201) 992-alll
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litigation vn the pa c. A. I don't know that he hss. I know he's tescified at the public heaiings. q. xas he consulted with you an the wrvcin9 of this report? A. Ne agreed to essentially assist me in compiling materia3s for my report. buc he did not affect in any way the substance of my report, wTi<h is based on my reseerch. q. Nis background is in economacs. Q. - He starts out, if we look at this report, sir, by stating in the second paragraph, "This study is desirable because it applies a consaseen[ methodology and data set to many differenC producta, thus making compxrisons more valid^; is that corcect. Q. Why is he tel3ing you why this study rs amportant? - MR. WEIL: Objection. Lack of founda[ion, spetulative. A. I had al[eady read this scvdy. I cite this study in my book. I had flaggedhim that I regarded thia as the beat s[udy in the literature. 6 8 (201) 992-4311 waga & Spinelli
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2-2D and ic s highly regaraed as che best Hiascicicy scuay across a variety oe proauccs. And uhat he's simply notin9 for the purposes of this memo vs thac the reason vhy it s good study s that they consistently estimate the tlemana for diffezent pro9ucis usin9 one methodology which is bettez than compaxing aceoss articlea where one articie tloes ic for shoes ana anocher arcicle does it for aucomobiles. p. why does he say, sir, this study is aesixable? why is he telling you what is a desirable stuCy if yov alrea9y knev ahat was a d i bl es ra e study ? 6 B 9 3 A. He's just writing Z think a summary 15 memorandum, antl I don't think [hat he inquired as 16 to what I knew or didn't know. }[e's just w[iting 17 basically a liceraenxe review here. . i0 c i f c r hec Dr pQ ac , si , it a . 19 Nichols works f or NSRA? 2D A. Yes. 21 Q. He's an employee? 22 A. Yes, he is. 23 q Full-ti ? 24 A. . Yes, he me is. 25 Q. And are you telii ng me that you Naga s Spinellf (201) 99]-4111
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z 2-22 mx. wE1L: oDjeccion co tne cnaraccerixacion. Lack of founastion. A. my wofola ansver is no, i•m not aware of ene rules. Huc secona, ne aia noc concricute to the substance of my report. He only assisted >n providing the background information that woula be useful for you. Because, as you can see• these matervals were prepared after my report. So cnese xrt the oniy documents p[epared for the deposition to have backgrouna filea to aistribute to the plaintiffs• attorneys. q. He then gives you a synopsis of rhe x-T consumer demanas an the unvteC Scaces scuay rn 1910, rs tbat cor[ect. A. He spends a couple of pages calking about their study ana then pr9videe a summary of the elasticity eseimates. Q. And he gives you a summa[y of wna[ page by page is meant by some of the informacion;i rs ehat correct. A. i regard his page-by-page summary as going through ane nfghlighting some of che key definvtrons providea by the authors, not vn[erprecacions provided by Dr. Nichols. 5 6 Waga L Bpinelli (201) 992-4111
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don•t know whether this fu13-time employer under contract to do research for tobacco inte s, tobacco defense lawyers, you do- know anything about what his obliga ions are under those consulting agreemenCS and contracts. MR. WEIL: ObjeCt3on to the characterisation. I think you also stated employer" and you meant to say "employee." MR. BSCNSL: Emp3oyee. 1 apologise. A. i don'[ know the cheracCer of his contrac[s. I know he's working with me on this Q. so he is wo[king w3th you on this case, and if he has a concract, he has a financial interest as an employee under this contract, is that correct. MR. WS1L: Objection. A. I don't know hie financial inte[est is any diffe[ent from mine, whicT is that when we work . time on the case, we expece to be reimbursed. Q. Are you aware of Che rules, s1r, for an expert vitness who contributes to an expert repo[t as to whether or not they have a financial interese in the o.tcome of litigation. 5 6 8 Waga t Spinelli 12011 992-9111
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may be affected by whether you consumed the product in the past. So, for example, if you consumed meat last period, the pzobability that you'll eat meat this period will be vncreased. Q. He puts habit-EOrming drugs, alcohol, tobacco, rn diffe[ent categozies ehan consumer produccs that are non-hebit-forming, does he not? A. That is not teue. Nabit fozmation rn economics simply means an effect of last period1s conaumpCVOn on this period's consumpt on. That's the standardhabit £ermation model. Q. Do you underatand the fo[mula that he used? A. I would if I had the book in front of ine. And if he defines the terms, sure. I'il understand tbe Eormulas. Q. Do,yov know what the formula is, A. Which formula? - Q. The formula that he used in his book to calculate the elasticity determinations th2t he usetl? MR. WEIL: Would you let him look at the ar[icle. 6 8 Waga & Spinelii~12Dii 992-4111
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MR. BECNEL. No, I'm not letting him look at the article. 3 m asking him if he knows the Pormula. MR. N6IL: Are you asking if he's memor>zea cne formula? Q. I•m asking if you know the formula. A. I know what the formula for an elasticity Q. I'm going [o ask you, svr, on this sheet of paper to give me Che elastici[y formula that he ucilized for cigaretCes. A. I Lon`t know whaC he utilized. I don'C know his notaCaon. Q. Well, doesn't he have a different formula [han you have for cigareC[es? MR. WEIL: IC vould be easve[ for him to answer that if you wou18 leC him see tRe arCiCie that you';e refez[ing Co. MR. BECNEL: I understsnd. I'm asking MR. WEIL: You're asking him if he memozvzed the formula. Q. - asking him if his equaCion -- and, s I would like you CO slgn and daCe the equaCion that you used, so we Can mark vt as an 6 8 Waga E Epinelli (201) 992-4311
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MR. WE1L: Objection. A. You ve a3luded to that, anE I don't xemember wat exacCly Chey said because it was srx years aqo. Q. Give me the book. Do you consider tobacco consumption Co be habit-£oiming? MR. w6IL: Objection. Instruct ehe A. I'm not going to provide any medical judgmenCS. Q. I'm noC asking y0u Co provide medical judgments. You said you relied on tTe informeCion £rom this study, and this study says what concern ng the habit-torming propensities of Cobacco, if you relied on it. MR. wfilL: Objection. Instruct ihe wreness noC Co answex. He's noC Cestifying abouC Che habit-forming~propensi[ies of cobacco. MR. B6CN6L: Counsel, the firs[ piace that yov see Coacco mentioned rs on vage - 10. Q. And it says: "9y a11 accounis tobacco consump[von is habit-forming, which means that it does no[ adjust immediately to chan9es in income lor prices, for that maCCerl and Chat 5 6 waga & Spinelli 12011 992-9111
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2-2s Q. Well, you read Che article. Tell me, does vt have a tlisclaimer or not? A. Well, I read [he book, and I read the book before I wro[e my book, so that means I read [Te book ovec five oz svx years ago. So I don`C remember everything tha[ they said rn the book. Q. Well, Whax is [he eelevance of that article as vc zelates to tobacco rn your opinion >n tnis case. Mk. WEIL: ob5ectlon to Che form. Calls for a 1ega1 conclusion. A. T can only discvss how this article or this book relztes to my opinion, and LTey estamate elasCicfties of Cemand for tobacco [hat are within the general range of the kinds oE elas[icities we re gotng [o talk aboat for Che more rzcen[ era. eut, more impor[anxly, if people wanced co compare, let's saY~ Che elas[iciey of demand for tohacco [o things like the demand for forniCUre, che demand for shoes, and s0 on, here is a - comprehensive lis[ xhat summarizes how these vazious products zespond to prices. Q. Well, Were you avare, sir, that in that very book or dsticle theze is a disclaimei as at rels[es to [obacco? 5 6 Waga & Spinelli 1201I 992-a111
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11ked buying a ca[ last petiod. I m moie likely to buy a car this period. Q. Nhat does 'state varaable" mean. A. Well, 1C can mean lots of things. I[`s a variable to describe a state of the woildd p. As ie affects this azticle in tobacco consumption with price rrse involvedt MR. WSiL: Wou1tl you 1- him look at the arCZCle. MR. BECNEG: No, I'm aSking him a question, c0unsel. MR. WEIL: You re asking him -- MR. BECN6L: I m asking him questions. He's an expert. He's a big boy. He knows wa[ he's done. He's wozked for you-all for yeara. rhis has nothing reactionary or radicai. MR. WEIL: You'ze asking him to rnterpret a two-wgrd phrase out of thousands of pages thac are on this table without him looking at the page you're ieferring to. - MR. BECNEL: I didn't purpoit to be the expert, he did.MR. NEIL: He s not a memory expert; he's an expeit on e.asticicies and rsk perception. 20 waga s Spinelli (201) 992-41II
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Q, well, he's summarvzing the artvcles an the work and transmvtting them to you for your ra~~ew, ~s ne noc. A. He's lis[ing Ehe key detinitions from the book. Q. And he is tel3ing you what aie the pros and cona of that par[icular study and that particular article that he's referring to? A. I tlon't see any crvtique pros and cons, I just see him ment.oning we have elasticitieS for these products but not for those producCS. It s simply a factual discussi0n of wnat's in the article, as far as I can tell. Q. In fact, he says on Page 2, "H-T discusses vhy current consumption may be positavely related to previous consumpt 0ns for goods like cobacco": is that not true? A. That's a roductory sentence before he quotes a paragraph out of the book. So he's simply leading in to, tnis is like, "And neze is . so-and-so." And then he's providing dn txce[pt from the book that dealt with tObacco. Q. Did you un9ezline any of these atnaies, s>r. A. i•m no( sure what you meaning by waga s Spineili (201) 992-4111
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2 exRibit. A. (The witness complies) MR. WEIL: I just want the jury to unde[stand ihe scope of what you're asking him for. I mean, the amount of documents that we have produced to yov that Nr. Viscusi has reviewed is probably a foot or so high. You'Ve pulled out one pa9e vhich Sa -- I don't know what percenta9e - a millimeter of an inch, that is, and you've asked him if he's memo[ized a formula on one page out of probably tROUSands of documents. Thet's what you re asking him. You don't want him to look at it, you ver just test ng his memory for one article out of hundzeds of articles out of ihousands of pages. Is tha[ che question? A. And there are dozens of [ormulas in tha[ one book. wRlt's today's da[e? p. The 2sth. MR. BBCNEL: We'ze 9oing to mazk that exhibit as (bocumen[ marked as 6zRibit V-6 for identification) Q. Now, is St not a fact, sir, thaY the formula thdt you've written for tobacco Waga 1 Spinelli(201) 992-9311
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Q. You can ansve[. MR. WE1L: If you remember how it was used on that page that he's ne[ showing you. A. I don't remember how it was vaed on xhe page. Ane I should note that Chis is the fizst time 1 ve worked for Mr. Weil. I haven't been working for him for all Chese years. Q. IC s Che first Cime you wozked fz this particular lew firm in this particulaz context, but you've worked fr Che tobacco industry over time for years, haven't you? A. I`ve done work from Cime to [ime fo[ law firms zepresen[ing ehem. Q. And you were Ceaching for years aC Ouke Univezsity, which you said the foundez of that unversity was s tobacco baron? A. He's betn dead for a long time too, and believe it o[ not, there's not much discussion of dead former donors to Che school. Q. What is mezne by the ^seatic character of tobacco consumption"? MR. WEIL: In what conCexC? Q. In the context of [he article ChaC you relted on, the H-T study in 19?0. 4 5 6 8 Waga 5 Spinelli 12017 992-4111
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current consumption is positively influenced by consumption in che more or less recxnt past1 lsn't 3[ a fact thae tha[ ar[icle, sir, counters exactly what your opinion is in chis case. it says it is not reflective of price rlse or fall? A. No. What they're saying is that the effect vs no[ as great as it would be if there we[e no dependence of current consumption on whether you've consumed the product in the past. when economis<s talk about habit formation, they mean it quice differently from medicai experts. Q. Well, when che author says: "By all accouncs - and 1 m quoting tlirectly -- "By all accounes tobacco consvmption is habit-forming, which means that it does not adjust immeLiately to chanqes in income lor prices, Eor tha[ matter) and that current c u,mpcion," and it goes on. what do you think they mean by that? Mk. WEIL: Could you let the - witness see the article that yov're referring to. MR. BECNBL: cer[ainly. A. (Witness [eviews document) This is jvst an example of a p[oduct, and they could have given ocher examples as well, where current consumpcion 5 6 B waga & Spinelli (201) 992-4111
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c0nsumpeion as vt relates to vncreases or decreases in price is different chan that contained by the authors in chis ztticle that you relie8 on, CTe H-T artvcle? MS. JOHNSON: Object to the form of the questvon. A. 'Ahat I have vritten is the Po[muva for the elasticity, the price elasticity of CobacCO. What you have asked me for ve an eguation regarding the consvmption of tobacco, which is differenC. And as foi vhat`s on theiz page, Z don't knos~ what's on their page. I don't know their pa[ticular notatvon. This as my notataon. This is my formula, MR. WEIL: object to the chazacterizaCion. 0. Isn t v[ a fac[. sir, that the authors of this a[C cle sCateB, "When you have p c h roblems sucT i ashpvesychol0gicsal stock ChaC special aracteiis[ca a to be ued or assumed"? - A. i m not su[e what they're zeferring to vn the context of that discvssion. Hut Z've vndicated before, for some produces past c0nsumption can affect fucure consumption. If Z disc0vez Z liketl potato chips last period, or Z 6 S waga & Spine131 (201) 992-4111
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mathematical form of ehe demand equation cannoc he specified in [he presene s[a[e-of-[he-arc, does he MR. WEIL: The same objec[ion. n. He•s talking abou[ you cannot do a structural model of the demand equs[ion. So what you're escrmating is essentially a reduced form p. Wha[ type of model did he use to reach his conclusion? MR. WEIL: The same objection. A, x regression model. Buc vt s not a s[ructural model derived from consumer preferences; rt s jusc a simple model. Q. So it s your opinion, sar, that he used a regression model? MR. WESL. objection. That-s his 6 memory. Q. Is [hat correcC. A. That is my memory from seven years a9o, yes. Q. yon haven'c revrewea chis rn reference -- you haven~t revrewed this areicle at a11 rn reference ro your exper[ report today, did you. Waga 6 Spinelli (201) 992-4331
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2 MR. wEIL: Objection. mvschazacterizes his testvmony. A. I have reviewed the elasticity estamates, the crosa products. And I had already reviewed the specific tobacco elasticity estimates in conjunction with my book,so there's no need for me to reread that, I focused my atcention on things I hadn't read. p. whac is a•aynamic moGel^? A. I diaeessed that earlier. A dynamic model would be one with multi-period effects. Q. Ssn't ic a fact ehat's whac he used as reference to Cobacco? MR. WEIL: Objection. Q. A dynamic model] MR. wEIL: The same objection. A. That's how you can distinguish the sborc-run versus long-run elasticicies. And tTat s wat I was discussing earlier, that pest consumpt on affects £uture consumpt on. You pu in the past c0nsumption vzvable an the equation, and that's how yov test for what you cali habit formation. p. Isn't it a£act that simultaneous equacion techniques are not very reliabie 6 Wa9a & Spinelli (201) 992-4111
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LLib-L66 (LOt) ?ttauTdS s e6aM ay] ae4] s~es a4 ]Tnsa= e se Puy 'b 6yTy]FVe aney ].yop noh satqe?=en ]noyaTM 'Y ,]>a[qo awes ayy ~~x3M aW a, aoP 'sat4aFZen saBnT>uT a? Purc '0 s=oy]ne due Fq s o?]dwnsse awos sapnT>ac tapow Fzan3 'Y a o;aq ee .]>ac4o awea avy ~~xaM aw ~ ysntanoo e v>ea= o] xapxo u. =o4ane aq> ;o s oTaawasse ;o =aqwnn e papnT>uT APn]s y-M ay] u? pasn sTapow av] ]e4] . a>e; c ]T ].usL '0 s]>adse poTZad-T]Tnw ay] a4 ptnom y>c4m s]>adse >, euAp a4] o] Pasoddo se 2]T]uen6 vo s1>a;;a a?xd po[=ad ssTy]?m ay] oa buxzxa;ax aq P.I za]>e=e4> >T ]s ayl o] 6nixxa;a= azam t 3T an3 s Fa an6 u.]>aTTO>a= 6uTpea= asa4] tTe o] =amsue ay] mouM >,uop I V =amsue ve> aox 'a oa 6uT=>a;az a=,no~ ]e4a a6ed a4] yo ase=yd ay] aas w?y 6u?]]a? ]ou az.nox ]ey1 ]>e; ay] oa osTe pne ', ,]>exey> a4] oa ,»a(q0 ~~23M 'aW Z 11 -L
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2-38 analysis. Do you agree wrth that? A. First of 111, they never say they used svmultaneous equatvon techniques, they just said that's what the state of theliterature was up wntil 1-. And they're not badmouthing their own estvmates, they're saying, this vs what the histozy has been with these approaches. Q. poesn'c it also say this appears co be due rn large part to the failure of econom3c theory co fozmulate an adequate supply equation, except for crops which are not really relevant Co the markets for consumer goods? MR. WEIL: You ce asking him if that's vhat the article says? MR. BECNEL: I'm asking him if that's a true sta[ement or an vncorrect A. I think w n do a lot more nov than we could then rn terms of finding surtable 6 Q product? 24 A. Yes. 25 Do you considex tobacco a consumer And the authors of the aztrcle, the H-T artrcle, state that except for crops, it•s not waga s Spinelli (20i/ 992-41i1
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0 Q. Does che article have a diaciaimer as relatea Co tobacco escimaces elas0icicy resnlca? MR. WEIL: Objection. A. I don'c recall. Q. lsn c it a fact that the author says that it does have a bies? A. Couid you read me the passage you'ze zeferring o. Q. I'm asking yoa, srr, zan t it a fact that the article does say it has a bias? MR. WE1L: Dan, again, you're not going eo let him see the article? MR. BECNEL: No, I'm asking him quesCions. MR. WEIL: Yon xe aaking him for hia memory. I mean, thia aa [eally getting ailly. MR~ HECNEL: That's why he'a auch a highly paid $500 an hour expert. MR. WEIL: He's no[ paid as a memozazatron expert. MR. BECNEL: He's made [ens of thousands of dollars in this case. MR. WEIL: Which palea compazed Co vbat yo-e made, according to what y-ve baen 5 6 Waga . Spinelli (281) 992-4111
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reliable. were you aware of chat, sir. MS. JOHNSON: Objection to che form Of che quescxon. A. when you say "1t s noc eeliable,^ you're talking about sxmultane0us equation estxmation, you're not calking about ordinary least squares or other statxstical techniques? Q. That's corzect. Yes. A. That was my answer. Q. Is xc nOt a facc, s1r, that sxmulcaneous equatxons vs vxreually impossible ana that the use of sxngle equa[ion estima[ion is unavoidable in demand analysis as of 1970? A. Mose equacions now are scili sxngle equation models. Q. nia svmultaneous equations bxas adve[sely affect the cesults? MR. WEIL: Results of what? MR• BECNEL: The N-T study. MR. WEIL: Objection. Assumes - facte noc in " iaenea. A. ic aepenas on whac you"e inesrescea in. euc if you re only xncerested in a reducea form esc~mace, ehen tere~s no necessary bias to what you're getcing. 6 Wage & Spfnelli~~(2011 992-41f1
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[ellin9 us the last cwo days, with your own Meicedes dealership in Paris and a town in Lovisiana. MR. BECNEL: I'm a country lawyer; I live 1n the country. Q. You can a r. n. I forgec the question. p, lsn't it a fact that the author says, as it relates to tobacco elasticity equations, chat there vs a bias? MR. WEIL: I'm going to object. This is a compieceiy rnappropriate memory tescin9. A. I don•t recall che psrticular discussion. Q. When we [alk about the basic dynamic model that the author used, you have to determine what ihe history of the an9ividual in terms of consumption is 1n the past, do you noc. A. That's xhat i refexred to earlier, which xs, that you put in last period's consumption. As mentioned, they don't use individual data, they're using aggregate data. p. Isn't it a fact that che author says when you have people who are habit-forming through'the use of minors that it again skewa the Wa9a & Spinelli (201) 9s2-4111
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MS. JOHNSON: Objection. p. mean ng Chat mvnore help xew [he model? A. 1 don'[ recall. p. Wha[ is ^flov adjnstment^? A. Well, theze are ato<ks and [here are flows. I'm It sure what adjuscment they're making Lor flows. i m not sure whac you're talking about. Q. Whst are sta[e adjustments"? A. Adjustmants Cor different sCates oY the world. Hut, once again. I don'[ know which pae[icular s[ate aBjusCments. Now, it could be. adjuscments for diffezent sca[es as well. So •[ could either be different crrcumstanceB of the economy would be a stace of [he world, but also if you•re doing sta " adjustments by state, it would be state dummy variables. Q. Who is Richard S[one? A. Stone and Geary, as coauthors, weze economeCrlclans, now deceased. Q. Have you read [heir work? A. S[one and Geary techniques are diacussed in econ0metracs classes. I may have read their B Waga S Spinelli (201) 992-4133
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unaerlining Q. aus[ vhat the word implies, taking a pen and underlining. MR. WEIL: an sorry, do you mean the articles behind -- MR. BECNEL: The ar[icles behind. Q. Did you underiine the arcrcles behind? Yea or no. A. I don'c know whether I have underlined them. 1 have copies of most of these arCiclea in my office. I'm not suxe whether I underline or mazk it the margin or don't mark them at 111. But these are not my underlininga. Q. Do you chink, it, in your opinlon as an experc, chat the 1970 study, which partially deals vith tobacco, ra aefinitive in any way as it relatea [o Chis case. A. ie s the best scudy in the lioera[ure that cakes a comprehensive look It a varaety of products. On co the exten[ that you want to compare the elascicities of demand for cigarettes vzth other products, thia remarns the beat study. I. Do the authors have a disclaimer as it relates co cobacco, rr. A. I don't know. Waga & Spinellf 1201) 992-4111
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wich Nick Nvcholsana Bernie Retldy's report to you dafed septemher 17, 2s9?? A. 1 don't know what 6ate goes with which report Q. Well, 2'm refe[ring to the bookleC you gave me which is called Backup Book No. i fo[ the deposition of Professor Xip Viscusi dated Septembez the l7th, 1997. MR. NEIL: A[e you telling me there are no other reports dated Sepcember 1, 199?? MR. BECNBL: 2'm Celling you in thac book, that`s the only report for that day. MR. WEI1: No you want to show him 5 6 s the report? MR. 6ECN6L: Well, I only have ihis A. In fact, workplace rest[>ctvons, yes, S have seen chac. Q. Oid you rentlei an opinion in this case, sar, concerning workplace restr[c[aons. . A. I will iender an opinion where 1 will draw upon che findin9s with respect co wo[kplace restrrctaons 1. making my opinion. Q. Show me rn the feur corners of your reporc where you make reference to Smpacc of Faga & Spineili (201) 9s2-5111
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Q. Where does tobaccofall. short tarm or long erm. A. Theze is both a short-term elasticity and a 19ng-term elasticity. The leng-Ce[m elasticity is bigger than the short-term elasticity. o. Whexe does tobacto fall vithin the long-term elasticity numbers? A. Some are higger; some are smaller. I vould have to .ook at the list to give you some comparisons, but they are on the chart on the document you have. I dOn't have the document in front of ine, so I can t refer to it. Q. Doesn't your economr6t, Mr. Nick Nichols, whom you c0nsulted with, atate, sir, that no eseimates are available for many goods? Can you explain why? MA. WEI: Objection. Do you wnt to show him wat you're refexring to. MR. BECNEL: I'm referrfng to his atatement, "NO estvmetes are available for many - goods in shozt-Cerm or short-run elasticity models." 4. Why is that? A. In some cases they coultl not estamate a statistacally significant prvice effect. 3 6 8 ._-_- waga & Spinelli (201) 992-alii
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2224-266 12aZ/ ?iTau?dS s a6eM uaan]aq a>ua a;3?P ay] ]n9 'Tte ai ],uop I y ? ap PTn ......... ua sy ~9NJ38 'UW c]. vT3aP Pinon ], uo>a ne sa saaw nox ~2I3M 'UW - ~aT>?1xe t-H ay] u? Pa?Pn]s s»npoxd ad~]-]?qeG xay>O aza ]eLLM 'b u6T ,].sod e y]?n ],?33aoa y y <,.] a.a?33ao> a T]TSOd„ e sT ]e4M 'D h]xadoxd anbTUn e 6u?ney ]T LTeaaz ],vop I v .a>a4qo axaM aW GPaTP^]s s.~TPOwwoa za4]o a4] 3o ita o] pasoddo se h>xadoid anb?un s aney >ou ], aoP buTaxo3-]TqeU s? >i asneaaq puy D oa>eqo] ;o u ?>dwnsuo~ y c ]anPoxd o»eqo] zo3 atqe?zen wao3s x0 ]ua?>c33aoa a4] . ]e4M '0 ]ay] zo3 ]4 .a?33aoa Pa>awT]sa a42 ]snP V c>eV] xq ]ueaw s. ]eyn 'D ,aenba ve , aTGe?xen e 30 wxo3 ~~o]s ay] uo ],a?3;aoa xnOh 'tl ~„] ,a?3;ao> x>o]s„ e T ]eqM '0 sxeaF OZ ]sat ay] u, rs0]5 ~Q 6uiq]~Oa Paax aou aney ~tu?e2xa> I sOG6T ay] ? aT>?]xe TeuT6?zo 11 EZ B L Ct-Z
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2-46 Q. In facc, over ha lf, or right at half, 3] It of h ? 81, Chey cou ldn 't do vt, could t ey A. The datz were not sufficiently rich co 5 distinguish the price effecc and quantity for Chose products, yes. p. In fact, the 37, he says, 3) of Che e 9oods of the 81 studied have no estrmate of price 9 affece vnacsoever? 10 A. That's whaC Z said. In many ca ses they could It estlmate a scatistically significant 12 effect of prices based on Che daea they had. 13 Q. So why do you say, avr, rn your 14 opinion, that you consider prlce as co cigareCCes. 15 Che price rrse o[ the price increase, wheChei iC s excvse Caxes It rncrease8 vn proficability by che manufacturer, to be significant? A. I'm not discssin9 excrse caxes or profitability.What I am saying is thaC it's well escablished that consumers respond Co pzices. As- prices go up, they bvy less cigarectes, fewer cigarettes. And this rs an example of how consumers csn and do make choices wich respecC to theiz smoking behavior. Q. A11 zight, srr. Are you familiar Naga 6 Spineili (201) 993-4111
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workplace resCrictions on smoking behavior. A. (Witness reviews 6ocument) What's in here is prices. Financfal peices and workplace restriccions are just, from an economic standpoint, the equivalent of imposing aoother price on smokers, the price being that it s more difficult to smoke, so rt s a time cost. You have to 90 outside to smoke. Economists vouid view that as equivalent to a financial price, and you get the similar type of effect. So I view it just as an elaboraCion of my price effect. Q. So at no place do you make any statement that the lmpact of workpiace restractrons on smoking behavior, you use none of that termrnology in your report, do you? A. Mo, I do not. Q. And you didn't intend to use that termvnology in your repoet, did you? MR' WEIL: In his writCen summary? MR. 6ECNEL: In his aritten ieport- to the court and to the plaintiffs, as cequired by [he Federai Rules in a cas nagement order. A. I rncended to taik about che choices people make with respect to smoking, how they respond to financial rncentives. This rs just another 5 6 Waga 4 Spinelli (201) 992-4331 m
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2-49 exampie of a prvice .mposed on smokers. And not only have I read these articies, but I am the peer revrewer for one of them. So tha[ these are Chings I'm quite familiar vith. Q, why are Mr. Bernie Reddy and Mr. Mick Nichois etill wrrting to you concerning the impac[ of workplace restricCion6 on moking behavior almost a mnnth or so after you have wrrtten your report? MS. JONNSON: ObjecCion to the form of the questfon. A. A11 of these Chings came after I had vratten my report. And essentrally ihese are just documents for me to make available Co you for this deposition. These are things Chat are no going to influence my opinion. My opinion has already been formed. Q. why didn't you just give me the documents, why did you have Co have eummations, revvew of article summat>Ons by these individuals3 A. First of all, they w0u1d have baG to provide the documents, an3 I'm not sure vhether the summsrres they are preparing are of primary benefit to me or Mr. weil. But this is simply a part of, what they did. I did not ask them to 6 B waga s Spinelli (201) 992-4111
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2 2-ss Rv1es. Because if Chat•s the case, you ought to look at your own expert reports, which in many cases were one parageaph or one page long, and at deposition they elaborated and explicated. And that's what Di. Viscusi is doing today, xnd yov have the opporcunity to ask him all the questlona you wan[ to allow the elaboration and explication that takes place at a deposition. MR. BECNEL: Counsel, I am attempting to follow the rules of eviEence in the federal courts. I'm attempeing to further follow the rulea 1n terms of e[hics o£ the American Bar AssoCiaCion. and the Ameiican Hai Association's iules on professionalfam that I am requrred to follow, as should a11 1awyers be required to Eo11ow. And especially when i m dealing wieh a law professor. That's why a lot 0f these questions are being aaked. MR. WEIL: Di. Viacusi is not a member of the ABA. MR. BBCNBL: I didn't say Ae was. But he's in the school that's required to follow those rules. B MR. wBIL: And 1 believe he is waga k Spinelli (301) 992-a111
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2 2-SD provide summaries. Q. They stated in he[e, srr, that they were making basically execuerve summarres of a11 of these articles, didn't they? You re familiaz with an executive summary. A. Yes. eut I don't think that what they did .s thaC extensive. Certzinly when you get to the elasticity numbers, it's just essentially a table. Q. Well, they start outby saying, "These studies strongly suggest that as with the changes rn money prvice of ciqarettes, both effects A. I agree. AnC this is no[ new news to me. xn fact, one of the people who we re c>ting, cwo pape[s by William Evans, he's a former student and colleayue and coauthor of mrne. So it s not liks they- telling me something. I was the one who knew about these a rcles before they did. I was the one who commissroned them essentially to compile them. - Q. Well, the next statement is, °This eviLence pzovides additional support for the argumenc that cigarette smokers respond to changes .n the ef£ective cost of smoking vn [he same way that one would expect individuels to respond to 3 5 6 B Waga & Spinelli (20i) 992-4111
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2-52 MR. WEIL: And am I listed as a recipisnc of chat? MR. BBCNEL: Yes, srr, you are. MR. NEIL: Thank you. q. They used the word "this evidence.° what is meant by "chis evidence"] A. These findings in the licerature. I think you would vrew that as a synonymous statement. Q. It aays, "This evitlence provides additional support for the argument about cigarecee smoking,^ doesn'c rt.. A. it does. That's why I have discussed it earlier. p. It said nothing about you relying on chvs vn wrrtiug your report, does it. MR. WEIL: Relying on what? MR. BECNEL: On this evidence. MR. WEIL: Telking about wozkplaCe restrictions now. MR. BECNEL: That's CorreCt. - MA. WBIL: Let me juat note for the record that i hope you•re not saying chat Or. Viscusi or any expert is not allowed to use new vozds at a deposvta0n, words that go beyond the summary'report that is required by the eederai J 8 Waga E Spinelli (2o3) 992-4111
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changes in the cost of other goods oe ectivltres. They're trying to make argumencs for you, aren t Chey? MR. WEIL: Objection. Lack of foundacion, speculative. Q. Isn'c that iheir stacemena? A. They're not making any arguments for me. Q. weil -- A. They`re stating something. 8ut whe[her this is for the benefit of Mr. Weil or whethei iC's simply just for the files, I don't know, I didn't ask them to do this. I don'C know why they did this. I assume ie s something he discussed wlch them. MA. W6IL: Let Che re[ord ieflect that because Mx. Becnel has not fuliy identified the document that I am listea as an aa9ressee ana recipienc of the document. . MR. 82cN6L: I am referring [o Che document by Nick Nichole and Bernie Reddy deted - Beptember 1?, 1997, and that as listed >n Ethibit No. V-3. IC's called the Backup Book for Book No. 1 for the Deposition of Xip Viscvsf, an9 at s under the tab marked "ImpacCS of Workplace Smoking RestricCions." Waga & Spinel3i (2oi) 992-4311
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2 2-s7 up for any cigarettes missed during working hours.^ Do you agree or disagree with chat A. T disagree. Q. On what basis? A. That's what tTese statvstrcal studies show, that his hypothesis is wzong, people actually do deciease their total consumption of cigarettes. Q. Did you look ac that zrticle from Maryland, srr. A. I m noc aware that rs an artlcle. T believe that's just a sCatemen[ of the commrssloner of a depactment in the Mazyland state government. Q. Now, he sxys tha[ this memo to you aalyzs the work they did 1n 1994 in connectron with regulations in Mazyland an8 in WaShington, D.C.; aan t Chat true? A. Ne may have drawn these articles from things vn his files from those cases. - Q. Why was he telling you what he had done in Maryland an9 in Washington, D.C., in 1954? why was that important to your opinion >n Chis case. A. I't's not rmportant to me, but it may be 6 9 Waga & Spinelii (201) 992-4111
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2 2-5a following the rules. MR. HECNEL: We'11 find out. p. Isn't vt a fact, sir, that the Commrssvoner of the Department of Labor vn Maryland disagreed with your theory that price and restrictions in public buildings drive consumption aowna A. The Presiden[ of the Vnited States agrees with my position. p. I didn't ask you that question. I didn't ask you that question. A. I don't know wba[ the commrssloner -- what any official in Maryland does. I don't foilow Maryland politics. p. Is it not a fast, srr, Chat aztvcles dealing wvth Maryland wete included 1n the documents you supposedly relied on in forming your opinron. MR. WEIL: Objection to the phrase reied on. Mischaxacterixes his testvmony. - A. I knov the studies were done by Bill Evans who rs a professor aC the University of Maryland that S'm relying upon, but I do not knov that there•s any studles by the Commissioner of the Department of Labor of Maryland or any other 5 6 , Spinelli 120a1 992-a111 Waga
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individual from the Mazyland state government in my files. P. Is chere any eviden<e, pro or con, chat when you ban smoking in the workplace, smokers make up for not being able to smoke duxing cer[ain hours by smoking more duxing their off MR. WEIL: Is there evidenCe pro or con, did yon sayP MR. BECNEL: Yes. A. Tbe neC effect is that smokers smoke less if you make smoking more difficult in the vorkplace. That's documented vn the two studiea by my four trmes coauthor Fillfam Evans, as we11 as z study on hospicais that's included in my file Q. Is >t no[ a fac[ tha[ [here are studies, xncludfng the one 1n Maryland, rncluding the one in Massachusetts, that staces that iP you make it more difficult to smoke during xorkin9 - houzs or iestrict smoking in piaces that people ' sfmply smoke more in shorter periods of time when [hey'xe off or during breaks, so that the net effect is the same. A. We have documentation -- these studies Waga 4 Spinelli (201) 992-4111
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z-56 suggest the net ef£ect is that smoking is down. Q. Well, your contributing authors. Nick Nichols and Bernie Reddy, in fact actually say the Commissioner of Labor in Maryland when he vssued regulations in `99 banning smoking in most workplaces have made that smokers incxease the number of cigarettes smoked outside work to make up for the cigaretces they m>ssed during working hours. Do you agree wrth ehat or not> MR. W&IL: Objection -- M5. JOHNSON: Qbjection to form. MR. WEIL: -- to the enaracteri:ac.on. Q. Do you agree with that or noti A. Well, agreeing with 3t -- Q. It s e>ther yes or no. It's either yes, you agree, or no, you don't, and you can explain. A. 2 don't know what Te said. You rarsed to me vhan they wrote chat he eaid. . Q. Nere's vhac 1'm [ea6ing: "xhe Commissioner o£ Labor in Ma[yland when he issued regulations in 1994 bavntng smoking in most workplaces have made thac smokers ancrease the number df cigazettes smoke6 outside work co make 4 8 Waga fi Spinelli (201) 992-4133
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2-58 ampoztant to Mi. Wei1, leCt ng him know Chat this is not new work they'[e doing, so-that they were able to draw upon their past work and thin9s that Chey had an their filea. Q. In fact, Albert L. Nichols, a Ph.D., gave an affidavit in the CirCUit Court for Tzlbot County, did he not. A. I don't know wheie he gave 3n affidavit. 4And he said -- it was an a case of H 6 G ResCauranC. Incorporated, Plaintiffs, versus William A. Po91e, et a1., Defendants. Do you know who Chose people are. A. No. Q. Do you know why this anformation was in a booklet that you relied on an giving an opinion in this case for medical monatox ng n Pennsylvania? M5. JOHNSON: Objection to the form of the question. MR. W6IL: ObjeCtinn to the foem. - It maschaiacterizes his teseimony. A. I am not relying upon these in forming my opinion. I formed my opinion and weie pioviding background documents to you that anclude studies that i wili 9raw upon. 8 Waga 6 Spinelli (201) 992-4111
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MR. WBIL: Let me just state for the record the crrteiia that I used, so there's no m>sunderstanding, vn producing these documents. I didn't want to play games, and I provided documents that Dr. V1scusl was given in connection with the formulation of his report and the formulacion of his opinion as it will be presented at crial. I did It tcy to do the metaphysical hair splitting about what he was relying on and what he was jus[ looking It but not xelying on, because I didn't wan you guys eve[ to say, ^Wait a minuce, helooked It something that you never snowea va. So I got a set of a11 this stuf£. nr. viscusv also got a copy of this stuff. I don't knov which of [he stuff he actually relled on, in che strict sense of the word, Dut it was provided to him, it was to me, so I gave it a11 to you. That was the criceria l used, just so Chere's no misunderstanding abosst the critexia . that I was employing in the production of aocuments. Mk. BECNEL: Counsel, 1 have nothing negative to say, other than I consider you a very professional, ethical lawyer. And I`m not 6 e Waga & Spinelli (201) 992-4111
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a lawyer licensed in Pennsylvania, I'm only visrting Pennsylvsnia, and as such, I think I've learned th- the rules in your court require full disc1osure. And I assume you complied with chat. MR. WEIL: Thank you. MR. BECNEL: So I don't have any fight or argument or anything negative to say. MR. WEIL: Appreciste it. THE WITNESE: Is it time-out trme. MR. BECNEL: Okay. THE VIDEOGRAPNEk: The trme is 9:4z, ana we wiu yo oee the recora. Ixecess) TNE VIDEOGRAPHER: The time is 10.05, and we are Dack on Che record. BY Mx. BECNEL: Q. Mr. Albert L. Nichols is a vice president of the National economic Eeseacch AasociatiOn, or NSRA, is he not. A. I believe he is. I'm not auze, but that - would be my guess. Q. Ane he has approximately 30 professionals that he supervises in va[ious jobs th- he's held; as chat not correcti A. jf thaC's what he says, I assume tha['s 8 20 21 23 24 25 Wa9a & Spinelli (2o1) 992-4131
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Q. He also stated that he prepared this affidavit vn your matervals ae the zequest of representatives of the Philip Morras Companies, Incozporated; vs that correct. MR. WEIL: And the date of the affidavit you re refezr'ng to vs. MR. BECNSL: Is in 19- He aoesn't aate ,t. MR. WEIL: Is it an vn re . Is there a matter reference> MR. EECNSL: Yes. He has that ae the top, but he`s sayin9 the report, iY's from the 6 THE WITNSSS: I don't think this repoit -- MR. BSCNSL: I mean 3980s. Wait. Let me get vt t. A pausel Q. 1994. A. And this is not something he did at my requesC Q. I don't know. It Was given ae infozmation you were relying on, and ehat`s why I'm asking you questions. If it wou18 not have Waga & Spinelii (201) 992-4311
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2-63 foundation, specvlatlve. A. I don't know which ie studies he relied upon. 11 terms of the effect of smoking rescriccions per se, Z'm not relying on 20 anyway, at s a much smaller number, and i m relyin9 upon studies that I believe almost a11 of which have been done since he Yestified. Q. Why did yov include his affidavit >n information you relied on. MR. WBIL: ObjectiOn to Che characterisation, mrsstates his testvmony. A. This is not information I relied upon; this ls a c0mpendium of background informacion relating to Che liCerature. p. In this affidavit it says, "Because of limited time, we have not been able to conduct an exhaustive litera[ure search. nor have we been able to assess the_ reliability of the studies in detail.^ MR. WBIL: You re stili quoting - from -- MR. BBCNSL: I m quoting di[ectly from the affidavit. Q. Do you know shy he's t[ying to do this en a wing and a prayer? 5 6 8 aga & Spinelli (201) 9s2-4111
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MR. WEIL: Objection. Lack of foundaeion, masseaees the affidavit, and speculative. A. To add to Mr. Weil's comments, which I Cully endorse, his affidavit was not pzepared for this case, it was for a diffeient case. Q. IC then goes on to say, Table i summarazes the results of their revzew. But it wasn [ rncluded. Do you know why? A. I don't know why. it may have been a taDle that did not surv>ve vn terms of the filing. I don't know why it wasn c>ncluded. I've never diecussed ihis issue with him. Q. Do you know the two approaches that that study relied upon. A. i have not zead Dr. Nichols' affidavit, so I don't know what two approaches you'[e talking abouc. 5 8 9 Did he use retrospective or tudies? MR. W£IL: Obje tvon. Lack of foundation. He just said he hasn't Iead the affidavit. A. Once again, I haven't read it. Q. So you haven't read the affidavit. Waga & Spineili (2D1) 992-4131
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been in there, I wouldn•t ask Ill about it. 8u[ since it s in here, and it says, these are the three booklets with Ill of the info[mation you reiied on, 1`m just expiorinq why you rely on it and why is •e important. MR. WEIL: Objection to the cbaracterisation. MR. BECNEL: Okay. Ail right. Q. Do you know vho are the representatives of Ill Philip Mozris Companies whom he says he's working for? A. This as in the past. Z had no affiliation with him on that venture, o Z don't know. I assume it s law firms representing Philip Morris. 4. It said Chat in doing this work foi the Maryland Departmsnt of Licensing ane xegulation I'm crying to counter their regulations - says he made estimztes, he hed colleagues working under his dicection, and he's revvewed 20 studies that investigated the effects- of workplace smoking restractvona on cigazetCe consumption. Is the 20 studies that he identified in this report the same 30 studies that you relied 8 MR. WE3L: Objection. Lack of Waga 4 Spinelli (201) 992-4131
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Do you knov whecher the documencs that he has in th15 booklet, which is known as V-3, are the articles that you requested him to pull? A. There are art.cles there, vn a9dition to the ones I requesced, because he did a fairly comprehensive compucer search and essentrally tried co pu11 cogether everything signiEicanc that had been done, irrespective of how iC related to exaccly what i was going co say. Q. Do you know whac a"before snd after survey.~ ra. A. Yes. 'Where you survey, wha[ever matYer you're interested in, before and after some event. So if you have a clean-cut event, you do ac before anU after the event dace. Q. Do you know what a reczospective study" is? A. Retrospective is looking back toward the past from a current point ln t>me. Q. And you have to depend on - sel£-reporcing, do you not? A. Ic would be self-reporting in a retrospective scuey, if you were to ask somebody, nid you smoke vn 1s83?" 1~ . Do you knpw if separete surveys 5 Waga 6 Spinelli- /2oi) 992-4111
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2 were donE? A. i don't know wnat kind of surveys he`s even ealking about in this affidavit. p. Qo you know wnat "paired sites" A. Once a9ain, I fiave not iead his affidavit. Q. Oo you know what 'cross-sect.onal vnterviews" were. A. i know what czose sectlonal interv3ews are. Z don'c know which pazticular ones were used 3n the scudies he's talking about in this aYfidavit. Q. in tnie aefidavit, sia, doesn•t he say the extznt to whicn smoking as res[rrcted ac work ei[es varves from study to study? A. Yes. I don•t know what he says, but i[ s certainly the case that smoking restrictions are not uniform ac tne workplacee in the United States. And you'11 have different woikp3aces in different samples. - Q. Was smoking banned et most woxkstations after the smoking ban was rnstituted? A. I don't know which state we ze refezting Well, we re talking about Waga & Spinelli (201) gg2-4111
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r Maryland. That's vhy he vas doing all this vork. Q. At least that•s what he says vn his report eo you. A. NOt a11 of the studies pertain to Maryland. Some of the studiea would be national studies. Q. Doesn`t he ssy Chat in many instances smoking was permitted in work lounges or smoking lounges and in some areas 6edicated in the cafeteria? MR. WEIL: Objettion. Lack Of foundation. A. I don't recall what Dz. Nichols said, because I have not read his affidavit. Q. The initial conditions varied fzom stndy to sovdy, didn't he eay tnat? MR. k'BIL: The same objectiOn. A. The same response, and I assume condieions do vary from study to study. - 0. Whae are the tuo impacta that he found in workplace restrictions on smoking? MR. WBIL: Objection. The doctor has already explained he hasn't read the affidavie. 5 6 B 22 waga & Spinelli- (301) 992-4111
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A. I don't know what he eaid, because 1 haven'c read what he wrote. p. Do you bave any idea why, if you . were requesc ng nformacaon, wny vs he che guy providing the information zbout cases that happened 1. 1994 and re rch that he did in 1994, which he says was not very we11 donei MR. MEIL: Objectiou to the charac[erizacion. A. In addition to the caveats about the cnaraccarizacion, what i requeaced were apecific asticles, as well as co the extene feaeible a comprehensive compendium of what has been 9one out there. By providing me the affidzvit in whicb he cates and discusses other studies, he's s mply giving a more compreneneive perspective on whac's ou[ there in the li[era[ure, Tne whole sec of informacion that's in the field. 4Does he come up co tne conclueion .n his affidavit, srr, that if you restract a - person from smoking Guring the daytime, that during breaks, wnether it s at lunch or breaks or at nighttime, that he resumes smoking the same number of cigarettes, just at different tlmes. ' MR. WSIL: Objection. Naga 6 Spinelli (201) 992-4111
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A. I dOn't knov vhat he concludes, because I haven'c read his affidavic. I know what che literatu[e eays. p. what does Che lice[ature say? A. The liceratu[e says thet smoking [estiictiOns decxease smoking. p, xow abouc, does ic scate thac it decreases smoking duriny chose specific hours or 9 as a total for a day's consumpcion? A. 10 Total consumption eeclines. 11 p. xow much? A. I don't recall the exact percentages. I could look them up in [he articles . 35 that . Ditl he y relied on in Q use you any of the equations x elasti<ity studies? 36 MR. WEIL: Objection. Lack of foundation. 18 A. I don't know wha[ Chat quesCion means. Since I've not read hia a ffidavic. I don't know what he relied upon. ' p. well, he did an extensrve scudy: pid you look at his study that he did, not his affidavit but the study that he did? A. I have not looked at the study that I call his aff}davit or wba[ever as appended to vt. I Waga k Spinelli 12011 992 4111
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hsve not examrned that, S`ve only read publiehed art.cies in the litezature and working papers. So I have not xead his affidavit. Q. In ze[erence to his esivmate, did you look at his bibliogtaphy of information that was prepared? A. I have flipped through the contenis of the bindeis, but I have not read his bibliography or studied at. 50 I didn't read over every trtle. I noted he had a bibliography. Q. Do you know what year Yrofeasoi Nichola joineL NERA? A. No. I don't know whether he joined when he was still a professor at Ha[vard or when he joined -- whether he joined when he became a full-time NERA employee. Q. Do you know what his educational backqround as. . A. Ph.D. from Harvard. QIn what? - A. In public policy from the Nennedy School of Coernment. And a bechelo[`9 degree from Stanford University. Q. what rs ^public policy"? A. IC'e a combination of economics, polltical 6 B 9 il Naga & Spinelli (zol) 992-4111
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oxides under the C1ean Aau Act Amendments -- are you familiar wieh that? A. I don't know what thae report 1s. I know what Che Clean Air AcC as, since I'm on Che Clean Air Act Compliance Advisory Council for O.S. EPA. p. well, how does natrogen oxides or oxides of natroge.n, N2O4 r N20, how does that relaCe to cigarette smoking? MR. WEIL: Objection. Instruct the q. In hfs CV, an artlcles he's wrltCen or worked on, do you find anything lis[ed in his CV dea1ing with tobacce? A. I don't have Che CV in front of ine, and I h- ne- reVaewea at. p. Do you know if he has any expertise an tobacco? A. He has c§iderable expertise in risk assessment. That would include risks and enviionmental hazards, and I don'C believe it s- restracted to any particular product. Q. He's wriCten extensavely about reduCing lead in gasoline, hasn't he? MR. WESL. Objec[iOn. Lack of fovndatlon, vague and ambigu us. 6 8 Waga & Spinel1i(201) 992-4111
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-6 o. Are DSM and OSNO produCts made only nn one location .n the onited Scates ana one loca[ion xn Japan because aC s so highly hazardous d a ? an angerous MR- WEIL: Objection- ins[ruct 6 the Q. Do you know why hia background an DSM and DSMO is [elevant to this li[iga[ion? 9 Objection Assumes MR WEIL . . : lo facts noc vn evidence, legal conclvsion. I 11 instruct [he w ness not to answer. lz Q. . can you call me, s>r. whv liacea in 13 his cnrriculu m vi[ae as of 19s4 chat not one piece of zeaea[ch data deals with <igatette smoking, when he wrote this affidavit? 16 MR. WEIL: Objection. L ack of 1] founda[ion. 18 A. 1 have n ewed his va[ae. ls 0. well, he wa s someone you [elied, 20 and he helped wozk on this case, didn't he? - 21 MS. SOHNSON : Objection to the £oim 22 of the a estion. 23 A. I have formed my ow n opinion. I asked De. 29 Nichols essentially to pu1 1 togecher seme articles 25 for me. Waga & Spinelli (203) 992-4111
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acrenee, decision analysia, and atatrst.cs. I also have a master s deg[ee from that school and am a joint facolty appointee there. Q. Nave you looked at all of the wrlecen testimony and consuicing reports he's rendered? A. No, I have not. I have read one of Chem, x believe, wich respect to public smoking resCrvccaons, and I have read some of his other puDlished articles, as vel1 as the analysis he did for the EYA lead stanCard. So I have rea9 some of his materlals. Q. Are you aware, when i aske6 you a numDer of the oxides o. nitrogen ye terdayy that he had done extensave studies on oxidea of nrtrogen? xitrogen monozide? Nitrogen dioxide? NiC[o9en tetroxide? Aie you aware of that, 51r. A. He was a prominent economrst at the U.S. envvronmenta1 Protection Agency. I have come across these regulations as well, but I don't - memor.ze therr proper[ies, and I'm not a specialise an their characteristics. Q. we11, if you look at Page 4 of his wxvecen tesermony and consulting repozts concerning the reduction af em3ssv of nrtrogen 5 6 Waga fi Spinelli~(201) 992-4111
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with xoX? A. i ve heard you people taik about N0X standards, so I've heazd it come up. But I m not a scienti t, so I've just heard it discussed. I know it s been regu'_ated. But when I see chemicals, analyze regula[ions, I iook at the cosc and effeces, but I den't inquire in[o the underlying scvence. Q. NOX is nitrogen dioxide, isn t it? MR. WEIL: Objection. A. It's nrCrogen monoxide. Q. NOX is nitrogen monoxide? A. I don't know. I'm just guessing. Q. All ri9ht. He presented a lo[ of testimony n NOx, did ne not? MR. WEIL: Objection. Q. Or. Ni<hols? MR. WZIL: Instruct the wv_ness not Q. xe Wrote on Nsn, did ne not. - A. I don't know what he's wzltten about, other chan what i ve alr¢ady mentioned. Q. What is NSn? MR. WEIL: Objection. A. I don't know. 4 6 Waga & Spinelli(201) 99]-alll
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antl how is it relevanc to Chis case- srr. MA. WEIL: Objection. E.11. fos a legal con<IUSaon. A. I don't know wfiat he's done [ha['s ielevan[ to [fiis case on benzene- i ve read his book published by M1T Press on benzene. Q. And tha[ was [he book he did in 1903 for the EPA, wasn t vt. A. No, he did a book, I believe vt s called s0mething like T_S E S 1 Iyi=ent'v or some such [i[le, published in Cambridge, MIT Press. Q. W'hen? A. I don't know. 'BOS? Q. This one as RS_S.1 f A'rbor MIT Press, Cambridge 1983. Is Chat tfie one you're referring to. , A. That sounds like i[. p. Isn't iC a fac[, air, tha[ an that- book by Dr. Mrchois thet that was [he tasis on which [he EPA developed xesCxictions on benzene? MR. WEIL: Objection. Ina[[uct the Q. Did you look It -- ate you familiar Waga 6 Spinelli (201) 992-4111
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-9 Q. pid you do any studies on the rvne of excise caxes and other cost factors .n additive-£ree smoking products? A. I'm not sure what tTat meane. Study of excrse [axes for these products? I think excrse tazes apply uniformly across products, so they're not altered depending on the additive charactezistics. Q. So you don't believe that additives would make ci9arette products, smoking materials, more or less addicCive, or people more or less nacotrne-dependent? MR. WEIL: Ubjection. Instrucc the MR. BECNEL: Counsel, we hdve a RJR document, and I want to handle this vn compliance wrtT tTe pzotec - order. I Tate to do ihis to any lawyex, buc i[Tink you underseand, you re not allowed to ste Chis document. - MR. WEIL: Is it a highly confidential document? MR. 8@CNEL: Yea. Unless RJR al3ows you eo see 3t. Bue I don`t think I can a11ow yqu to see it. 5 6 8 -- fi Spinelli (201) 992-alll
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pharmacology, svr. MR. WEIL: Objection. Instruct the 4. Are you familiar with the people from xaivard vho have done studies on n.cot>ne pharmacelogy? MR. WEIL: Objection. Inst[uct the 4. Are you an agreement, svr, Wvth the tobacco industry that now in 1119, measure vs promoting iCS p[oducCS saying, "We are additive free vn tobacco"? NR. WEIL: Objectl0n. InstrucC the 4can you eell me why a cigarette company would want to Cake additives out of naturally gr0wn cigarettes? _ W6IL: Objection. Inetruct ihe 4. In order Cn fully evaluate the - adictive properties of nacoClne on the human body, you wouid want to know whethez a iga ette has additives oz it does not have- additives. wouldn't you? ' MR. WEIL: Objection. InsCruct the B Waga 6 Spinelli (201) 992-a111
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MR. VERNON: Actually. I chink its designation right now ts just confidential. Mk. WEIL: I could see it it vt s confidential, hut 1f it s highly confidencial I can t see rt, it my understanding. MR. VERNGN: AC this point, perhaps -- you are RJR counse1, Z presume -- perhaps you could just look at 1t, because I'm not certaan at this point. MR. BECNEL: We just don'[ wan[ to get in Vrolzeion of that. Why don't we take a bzeak, and w can do that right now. TNE VIDEOGAAPHER: The tame 1s 10:31, and we are going off the record. (Recess) TXE VIOEOGRAPXER: The trme is 30:93, and we are back on the record. 8Y MR. BECKEL. 4Is anyone at NERA SnvolVed with biochemistry, sar. ' MR. WEIL: Objection. Lack of foundation. A. Z don'[ know. p. Is anyone at N£RA invol1ed in psychiaCZy or behavioral phazmacology? - Waga s £pinelli (201) 992-4111
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2 fac[ors" are. MA. WEIL: Objection. Insiruct the p. Do you know what leaxning and condicioning is vn terms of Cependence on MR. WEIL: Objection. Instruct the P. Do you knov what effect fnhalation of cigarette smoke does in connectvon with ihe abflity of a person to stop ox contvnue smoking? . MR. WEIL: Objection. Instzuct the p. is cigaxecce consumptien a poor measure of n1<oCine antake? MR. WEIL: Objection. Ins[ruct ihe Pis,ci9arette consumptfon more amportant to tletermine wethex someone can quit or ntguit as t0 determine the way smokes puff and- inhale cigarettes an9 ihe number of cigazettes they smoke. MR. WEIL. ODjecCion. Instxuct the Q. Are you aware, srr, that the way 4 22 24 Waga 6 Spinelli f201) 992-4113
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i 2-63 the conerolling influence in the selE-regulacion of smoke intake is che addiccive ptope[ties of MR. WEIL. Objec[ion. Instruce ehe Q. Are you familiar with drugs of abuse, svr. MR. WEIL: Objection. Instruct the We31, lec me qualify thac. Arz you calking about from an economres elascicity standpolnt.Are you talkin9 about pharmacology? i m not suxe what you're referencing. MR. BECNEL: A11 of the above. MR. WEIL: Overbroad, vague and ambiguous. Q. you can answer. ' A. I know of §ome illegal drugs, i£ [hat's whac you're talking about. Q. Are there wide individual ~ differencs in nlcotlne lntake and ica effect on [olexance and pharmecokine[ic faccors? MR. WSIL: objection. Instv'uct the Q. Do you know vhac "pharmacokinecic J 6 Waga 6 Spinelli (201) 992-4111
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MR. WEIL: objection. Lack of founda[ion, A. x aoa'c Rnow. p, xou said you've not met with any of the consul[ants. Have you looked at any of the behaviozal scien[vsts reports in this case to be put on by the defendants in this iitiga von. A. I have looked at no mate[r815 provided by Mr. weil or his associates. Q. Have you looked at any informa[ion on nacotvne pharmzcology? A. The only information vould be what I've zeaa in the Surgeon Geveral's reports and vazious arivcles, but xhis is not a specizlty Of mine in any sense. p. To unaezstand what you do, DocCOS, it is necessary to staze out w>ch a premise of what effect does gicotine have on ihe body, and therefore whae roie it plays when you increase or lower pricrng, is it not. ' M. WEIL. GbjecCion. A. No. All I need to know is cigare[tes. So whecher at s nicot>ne in cigarettes or some other chemical that generates an effect is not of conseguence to me. 5 6 8 Waga s spinelli (20i1 992-4111
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2-11 q. To cempare his werks on NO% rn reference Co how they relate to cigarette smeking? A. i have not reao his works on NO%, so I xouldn`c know how co compare them. Q. Oid you read his works on benzene and how vt cempares co cigaretCe sm0king? MR. WEIL: Objection. A. Hvs work did- cempare benxene Co smoking, buC he did wrvte a book on benxene. I'm not sure I understand the question. Q. Well, are you familiar with wbether or no[ benxene is vnvolved in cigareCte smoke? MR. WEIL: 0bjection. I vnstzuct Che vvtness not to ansver. q. Are you aware, sar, that m ny of the eapezCS in [Tis case for tTe defendants acknewledge ben2ene as vnvolved 1n t0bacco smoke? , WEIL: Objection. Inst[uct che kit 0. Are you aware Chat many of the - experts state chat the pharmacology of cigaretce smoke contavns oveY 50 addetl cTemicals? nR. w&IL: Objectian. Instruct the wvtness no< eo answeY. Q. Are yov familiar with nacetine 6 B waga 6 Spinelli (201) 992-a131
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p. Are you aware, sir that nrcot>ne pharmacology is now accepted throughout peopie in t.,e psychocherapy fieid, the behavio[al scientist field, the biochemistry field, that cigarette smoking rs highly addicCive? MR. WEIL: ODjec[ion. InstrucC the Q. Are ynu familiar wiCh the behavioral research tlone which firmly establishes nrcotine as the primacy and controlling factor in smoking? MR. WEIL: Objection. Instruct the Q. Did you in your work, sir, make any consideration chat nvcotvne pizyed a role as a primzry reinforcer in the effects on tobacco wvthdrawal syndrome? A. Once again, whether s nicotine or any other component of cigarettes Chat has the effect is no[ o£ consequence for these studies, since Iwas Eocusrng on the overall effect of cigaretees, which would inciude all the ingredienis of which cigarettes are compcised. Q. Isn' c i< not a fact that rn1 pharmacqlogy and an behavioral biochemisCry ehat 3 s Waga I Spinelli (203) 992-9111
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2- factor. no yoe nnderstana whac ••draw rea~sean<e A. It would be how easily the cigareCte draws when you puff lc. 5 Q. Correct. Is that an rmportan[ 6 factor? A. In terms of a price effect, effecC of B prices? Wo. We're looking at the quancity of 9 cigaret[es smoked. lo o. Does flavor play any role? 11 A. if cigarettes tasce3 bad, b h people wouldn't uy [ em. 32 13 Q. Does burning characteristics play any role? 15 A. The same type of problem wath the Yremier. 16 If lt Durns and at starts a£ire Decause the tip falls off oz something• that could be consequential. , 19 o. Do [he iwo-phase flow or [he gas 20 phase components play any role? - A. I'm noC eu[e what they do . 22 Q. Do you unflerstand "two-phase flow"? A. It flows Chfs way and tha t way? 24 (Indicatingl. So I don`t knox. 25 q. So you're not familiar with Waga 6 Spfnelli (201) 992-4111
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.Q. In cigaretee smoking, wDat are the confounding factors concerning incake from ciqarettes when smoking? h ? You mentioned tar. Any ot ers 5 A. Wou1d you repeat the question. 1'm not re whac 6 s [ is u i . MR. BECNB L: Miss Reporter, would you repeac the question to make sure I got at 9 right. •rouestion reaa~ 2 Di MR. WBSL: objectiOn. Vague and 3 am guous. A. I aon'C 13 still understand, what are the 14 confounding factors, tha[ do what? In other words, I don't understand what the role is 15 here. q. what did you understand Car - wha[ role does tar play in clgarette smoke? 18 A. lt s ofce ~ ewed as a summary measure of 22 23 24 25 the varlous chem1ca15 in smoking that are linked to aiseases. p. So tar yield is important in understanding your seudy; >s ehat correct. A. No. Ic s one measure you ceuld inclu3e. There's s.ome debate ever how important it Is. Q. Zs drew resrstance an important, Waga & Spinelli (201) 992-4111
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people adjust their smoking behavior is not th[ough price increases and decceases but rather through the way sm0kers modify thei[ puffing behavior according o the ta[ and nvcotvne levels rn cneir cisarecces? MR. WSIL: Objection. Instruct the QDo you knov when smokers smoked higher-yielding cigarettes, they took smal3e[ o[ larger puffs? MR. W£IL: Objection. Instruct the Q. Do you know when a smoker smokes lower-yielding cigarettes that they take tleeper puffs and consume more cigarecees? MR. WSIL. Objeceion. Instxuce the Q. DiQ you consider any of those factors in your rev>ew and study, s>r. A. My studies do control for cbe quantity of - igaretces smoked, and studies not here buC unpublisbed studies I've done make tar adjustments, which, to the extent the tar and n>cot.ne are correlated, would be an adjustment for that as well. 6 Kaga & Spinelli (2oi) 992-a111
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A. He has done woik in Chis area ihaC Inc 'read and which was ansirumencal in sett ng govexnmenY policy in this area. p. Are you familiar wvth any of the work he Tae done in MTEB, an atltlitlve of gasoline? D. you know what MT86 Had He's dene extensive woxk in airboxne benzene, has he not A. I've xead his book on benxene. Q. And benzene He a known caxcvnogenic agenY, a Class A poison, is it not. MR. WEIL: Objection. A. I know St`s a carclnogen. I'm net suie of the official designation. p. Do you know how poisons axe cassified? 2, 3? A, B, MR. WEIL: Objeceion. InstrucY the wiYness noc Yo ansvei. ' p. Ia it noc a facc ihac benzene it coneavned CO ciga eYte smoke? MR. WEIL: Objection. Inscruct the Q. what paper did he write on benzene 35 waga 6 Epinelli f2011 992 a111
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A. I haven't seen these studies, and 1 don`t know whether the studies you're referri.ng [o are pure xperimencs that held Llavor constanc, for example. p. Do you understand alkaline conditions in the body when smoking? A. No. Q. Do alkaline conditions cause a person rn excrecang nicotine eo rncrease or decrease consumpcion of cigarectes? MR. WEIL: Dbjection. Instzuct the Q. xave you read any arcicles on pharmacology of nicotine. MR. WSIL: As they relate to th2 his opinion >n cTis case. MR. BECNSL: No, in genezal. MR. WEI: Objection. Instruct him MR. BECNEL: As [o whethez he's - read anything? 1 don'c think you can Lo ehat, counsel. 1 ve let you get away wich a lot in this tleposrtion, but Z don't chink what he's read -- you can instruct him maybe not to give an opinion, if you think that chat is appropriate, but as to waga s spinelli (201) 992-4111
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2-92 ainaain? MR. WEIL: ObjecCion. Insiruct the Q. Do sensory and motor factoes. CNS fac[ors, affect a person's sm0king oe not smok'ng? MR. WEIL: Objection. Instruct the Q. Aze you familiaz wrth the coxrelation of sm0king mo[ivatvon facCOrs with age and daily cigzrette consumption? A. Z have examvned and I've done sCVdiea analyzing [he effect of 191 on smoking. Q. Is vC not a fact, svr, that the uptake of smoking is fo[med by psychosocial factors [hat are fairly ve11 known and tha[ are accepted in the field of nico[vne pharmacology? MR* WSIL: Objection. InsCruct che p. Is vt n0t a fact Cha[ [wo Chiras af smokezs do not s[op smoking ciga[ettes by Che age of 60? MR. WEIL: Objection. InstxucC Che Q. Isn't rt a fac[, sir, that two 6 B Waga S Spinelli (201) 992-a11i
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2. what he s read, I think I'm entatled [o that. I think chac would be a clear vvolation. MR. WE1L: I accuaily don't think you are, unless you can tve kt to his opinion. Yon're entatled, obviously, to ask him anything he's read that relates .n any manner [o his opinion, but you're not entvtled to ask him vhat novel5 he's zeading today. I think that's clearly beyond the scope of approprate xpert discovery. MR. BBCN6L: Well, I'm referring only to nacotinz phazmacology -- MR. WEIL: But he's not a pharmzcology expert. MR. HECNEb: I didn't szy he vas: I just asked him if he's read xnyching on nicoeine pharmacology oz pharmacokinecics. MR. WEIL: I'm going to 1et him answer at. I thipk vt s highly anappropzvate, but to avoid a dispue with you, I'll lec him answer chat quescion. - a. only to the extent at s summarazed in che repor[s o£ tRe Surgeon General. Q. Are you familiar vvth acute coierance an n.cocine pharmacokinecics't . MR. WEIL: Objeccion. 3 5 Waga & Epinelli (201) 992-alll
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2 chrrds o people do noc s op smoking by the age of 60, despite the fact that they're aware that there are heal[h risks and despite the fact that they are warned to try to stop smoking? A. nany people continue to smoke and choose to smoke awa[e of the risks and having recerved warnings percaini.ng to the risks. Yes, that's the foundation of my opinaon. Q. Thezefoie, dependence on smoking, on n>cotane addiction, 0n nzcot.ne dependence, are the key factors that determine vhether a peison cont.nues to smoke or not, is that not a fact, 5 NR. WEIL: Objeceion. A. That ca11s for a medical judgment, not an economa judgment. Q. So you would defer to ihose more learned in those Ei21ds than yov? MR. NEIL: Objection. A. I vonld not deYer to chem in terms of analyzing wha[ drives choices. 6ut if you're going to talk about components such as nicotlne, analyzing chis mechanism is not something econo s do. we analyze net resulcs. And tha- the focus of my expertlse. 20 Waga 6 Spinel3i (201) 992-4133
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LLL6-266 (LOZI ciian.ds s e6en , dnos6 saad iIe.~osdde dnosb saad ~c »a;;e >eV~ suo,x >?3iwes Lejaos asau; asp '0 >[ »a33e awo , noF 3, >a3?e saauasa?azd ?. »a33e s~s?y p ~u , ,>ap 6u?yows snoA 3aa;;e sso »e; >, uoaa b aaP SZ 11 EZ 11 oZ 6u?~ows snoR >aa;;e s6ucy~ ?o•iot e sax p 'peos4san0 , >aCqO ~~I3M "NW cssa{ sa~ows so asow saHOwe uo~sad e saV]a4n a i a>ap 3ey> sso3ae; 3uew uaamza4 ,a esa> , xaidwoa e>ou asaya sI 'OO~ZL ~4 4s?Pi; 03 hs> 03 6uzdoy sem I'hep0 'b 'dn c; an6 aV3 Xeaz4 an pln0~ p an6 punodwo~ [ >aC4o '1I3M 'NW i6u=xowe 3on :0 6uc~Ows s,uossad e 6ui0twsa;ap u, •teai60ioaswsekd puv •s0;ow •FSOSUas 'Le>c60LO4aRSd •tec>os i u0aa se y>ns sso;>e; vaan;a4 s il esa~ , aLdwO> 6uiutwsa]ap vc a6e]s , ai0s e sRe[d a,a , moLL mOUM n03 0p 'b li aas 6uiney LLe>ai 1~nOp I zo wsaa aV] PseaV ~.uane4 L p Bt L6-Z
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51954 025'1 Smoking Making the Risky Decision W. KIP VISCUSI ~ urvrvtxsrrr rxess
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2-94 p. Have you ever heard oE psy<hosocial motives of people beginning to smoke? MR. WEIL: Objection. A. I've read studies from other 9isciplines whe[e they would talk about things such as this. Q. xsn t that usually considered che first stage Of smoking, psychosocial motivations. MR. WESL. Objettion. Instzuct the p, isn [ the second stage oL smoking for pleasurable, calming, and scimulaeive eEfeces of nrcotvne >n the in[eractaon vlth the sensory motor c0mponents of the habit? MR. WEIL: Objection. Instruct ihe Q. D0 you know vhat the chird srage Of cigarette smokinq is. ~ y WBIL: Objection. Instruct the p. Did you revlev any of ehe c0mm0nlyreporced behavioral ane subjective ef£eccs of cigarette smoking? MR. WEIL. In connectien vnth his 6 8 report. ' MR. BECNEL: In connectron with waga 6 Spinelli (201) 992-4I11
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the plaintifis CAat Exhihits V-2, V-3 and V-q have Yo be copied, and counsel for Philip Morrrs will take those exhibits, photocopy them, and Federal Express them upon completion of the photocopying within the next 36 houts to the PLC office, which 1s locaced at 1528 Walnut Seree[, Philadelphia, Pennsylvania. (Whereupon, at 11:20 a.m. the deposition was concluded) 19 21 22 waga fi Sp1ne11i (201) 992-4111
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c e u T I F I c A T E i, W. %ip Vvscusa, Ph.D., do hereby cerCify that I have read the foregoing transcripc of my testlmony, and fvrther cextify that said transczipe (wieh/withoutl suggested corrections is a true and accarate recora of said nestimony. nated at th's ____ day of 199~. ________________- 8 Sworn.and subscribed eo before ne this ____ day nf ___ 1991. --------------- No[ary Public My commissvon expires: ---------------- Waga & Spinelli (201) 992-4111
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z o[ self-iegulates hi.s smoking intake? MR. wel1.: Oblection. A. No. I chink it s people like cigare[tes. I think I discussed that yesterday wzth respect to Premrer. The Premier cigarette contained nvcotvne, gav people the act of smok'ng, but yet people have r.oc bought rc. So I think they actually buy cigarettes because they like smoking. *p. So you would disagree with this . statemenc by "che bible" of N' h 1 , thac che evidence establishes thac nrcotane ls the majoz facto[ concrolling in smoking and self-regulation of smoking intake? You would disagree with chat? MR. WEIL: Objection to the characcerizacion, And I wonder if you'd be gootl enough to [eil us who ihe au[hors of 'the hible" MR. EECNBL: It's Oxfoid Scientific Publication, edited by S. Wonnacott, Mr. Russell; and Mr. S[olerman. MR. WEIL: What's ihe title of the 24 book? Ph 1 MR. BECNEL: r'i~ Waga E Spinelli (IOl) 992-9113
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MR. WE1L: Objection. A. From my standpoint, thac 1s an overly broad wish list of things. Pharmacokinetic factors anclude probably many, many things. So I'd want to see a precise lisc of exaccly what il as I'm buying anto. q. I don't want you to buy into anyching. I just wan you to ce11 me what you know. MR. EECNEL: We re about co run ouG of c>me on chis, so I chink we'11 stop on this tape, because shels going to have to change the cape MA. Y61L: Thac's fine. TH8 VIDEOGRAPHER: The tvme vs 11:05; we are going o£f the record. This il the end of Casaette No. 1. (Aecess) THE ViDEDGAAPHER: TFe tvme as il. 14, we arE back on Che record, and chis il th-e concvnuaxvon of Cassette No. 3. Hy MR. HECNEL: Q. Some of che reports xhat were given eo you by Eernard Reddy and Nick Nichols staxe thac concerns about health effects of smeking have 22 I m Waga fi Spinelli (201) 992-4111
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51954 0256
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MR. WCIL: Thank you, s1r. NR. BECNEL: I always assrst my learned defense counsel rn expanding Chear reading of li[eracure. MR. WEIL: I appreciaCe it. A. I think I zemember the quesCion, but if you could repeat it, we sort of got lost there. +(Question readl A. This bible ignores, or seems Co ignore. based on your charac[erizaGion of it, the major natural experiment that we have undertaken in the United Staees, which 1s that we ve offered people a cigarette with nlcotine, it gives [hem the acc of smoking, buC does not burn tobacco, yet they have noC boughe this cigare[[e' i think Chis natural experament shows that people are buying <iga e[tes principally because ihey enjoy smoking and like ehe taste of cigareC[es. Q. So you do not believe that ihe influence that causes a person to smoke or not ' amoke are the mechenisms which in[lude innate and acquired fzctors, pharmacokineCic factors, acute znd cronic colerances, learning and conditionfng? Do you Chink those factors are the vmportant factore rather [han pr ce. 5 6 B Waga 6 Spinelli (203) 992-9111
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2-99 shanged over trme. xow have chey changed over A. For example, the re's been more di scussior. of environmental tobacco smoke over trme. The 5 lung cancer rasks weze more we11 established 6 beforz other rrsks. Ev en in my smoking book I t give you, for 1985 and '91, different risk 9 p. Did you use that report dated 30 Septembez the lBth, in estrmates of overall 13 price elasticities that they gave to you? 12 A. 1 did not rely upon that. I have my own 13 table. bl e ut I did avail 11 myself of their summa[y ta e 15 as 4 we . And you only revrewed this after 16 your repo rt was alread y written. 17 A. Ye s. I have re ad many of the articles that 18 are summar>zed in.tTe table, as we11 as the ones 39 thac also appeared in my book. 20 pQ and I think you had told us yov haa 23 some additional Audics fi surveys you were going to 22 give us. And we would like to attach and ma[k 23 cnose as v- zn MR. WEIL: Mr. Vernon is being kind 25 Waga s Spinelli (201) 992-41]1
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Acdaim for Smokivq: A1otring ll¢ Riskp Drresion n ~ ~ - 5'_959 0255 MiI K l NC 1 HE R ISK t I)I:CIS7( )N 11/ K1P II/S(,1157
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Tii6-Z66 (i0Z1 ?LLaucdS 5 e6eM 6u?XOws s]?n6 uoszad a]OU io iay]ayn 6u?zioiauoa xo]ae3 xo[ew a4] a,] , s2 'a aqa aanx~svl ?]oa[QO ~~zaM 'uw ~aXOws o] do]s o] , ] , uosaad e uaym ase awoxpu~s LeneipV]Lm oaaeqo] ;o Saxrt]ea; u, aq] ]eyn mouX noR op 'O xam9Ve o] ]ou ssa ] aVa aani]suI i]aaCQO ~R23M 'NW c]V6?an ~poq paseaiaap pue 'axnsaa[d 6anoidwt '~aaxxue paseaiaap 'ssau]iaLe panozdw? 'Aiowaw panoxdwc i] i]uaauoa panoxdw? payows 2aV] uaym aney day] ]ey] des atdoad p?p •6u?XOws a]]aie6?a wox; n ipV]?m oa pa. ] oyn aLdoad u, pacpn]s an,noR siaded u? 6rtLXows a]]axe6<~ saoa 'a ]e 6u?n?xp ax,nod ]e4n s,;eV] ;< axns ]ou w,I s ?oya a2ay] 'awoV ]e saasi ]Vap?aae i?ay] 'QOC aV1 vo sa]ei ]vap?aae x?ay] 3o swxaa , xaNOwsuou w x; shem za4]o u, paia;;?p SxaNows xa4]aym ]e paXOOi 2 pue sa]1axe6?a ;o ?adwnsuoa xno2 s]aa;;e 6uxXOws a3laxe6?a moV ]2 PaNOOT 2 'Y iamsue vea noA -b 'peoxqian0 uo,aaa(q0 ~~I3M 'NW sZ 8 9 5 6uLV]FUe
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enough to pull them off the table behind you, Mz. Becnel (DOCUment macked as Bxhibit v-l for identification) MR. BECNEL: And with that, we will adjourn Ghis deposition. And since we have to leave at 12:00, and we have not haC an opportunity to read ehis, we re going t, adjourn the deposata n, and only if undez some extrneous circumstances [herel, something reactiona[y or zevolutionary an Exhibit No. v-7, we'11 leave the deposition open only for the purpose of questions related to Exhibie V-I . With that, we wili close. Thank you, sar, for your kindness. MR. wEiL. Thank you,.Mr. Be<nel. THE VIDEOGRAPHER: The time is 10:11. /Discussion off the recoid) TEE vIDEOGRAPH6R: We are going ~ back on the recorL [o make a correctaon. The tame as 11:17. And we are back on the record to make that correctaon [o the end of CasseCte No. 1. MR. 9ECNEL: IC is agree8 by anB beCweencounsel for the defendante and counse1 for 6 8 Waga s Spinelli (201) 992-9111
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$EsEdVEDgEpI o ~ IN TNE UNITED STATEE DISTRiCi <OVR': FOR TNE SASTERN DISTRICT OF Pn'NNE1'LC':.N::. CIVIL ACtION N0. 96CV-5993. V~~j r't~- ? 711COPIFIDEPJTiAL WILLIAM BAftNES, et al.. / SER) Ep Plainciffs, 1'f1.) ) ~s. ) Weposicion of ) . KIP VISCUSI TNE AMERICAN TOBACCO COMPANY, i INC., ec al., ~ Defendants. ) ) VIDEOTAPED OEPOSITION OF w KIP VISCUSI, a called on behalf Of che Plain[affs,wcakenspursuanc t che Federal Rules of Civil Proceduie, beEOre LisaoA. Mi11er. Regiscered [ofessional Repoitex and Notaxy Public in d fo[ the CommonwealtT of M athuseccs, iM1eOff andites of NatiOnal Economic Reseaz<h Asso[iaCes, One Main Scieec, Cambzidge, Messachuseccs, day, Sepcembez 24, 199'/, tommenciug ac 1n52 Nednes p.m. ~ S, , 7
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COMMONW6ALTH OF MASSACHUS6TT51 SUFFOLH, 55. 1 T, Anne N. Bohan, Regiscered Oiplomate Reporter and Notary Public vn and for the Comnenwealth of Massachusetts, do hereby certify that there came before me on Sept. 25, 1991, at 8:50 a.. ,[he person heieinbefore named, who was previously sworn to tescify co the truth and nothin9 but the truth of his knowledge touching and cencerning the matters rn controversy in this caus , ehat he was continued to be examrned upon h>s oath, and his exam.natron reds oed to typev[iting under my direcciour and that the deposition is a true reco[d of the testimony given by the wrtness. I further ce[tify that I am neithe[ a[[orney r c0unsel for, nor zelated to or employed by,any ettorney or counsel employed by the parties hzreco or financially interested in the action. In watness whereof, I have hereunto' set my hand and affixed my n ai seal this 25th 6 22 day of September, 1911. n ~ ocary Public My commrssron expires 1/17/2003 Waga fi Spinelli (201) 992-a111
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51954 0269 The Cognitive and Informational Context L
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51954 0260 Contents 3. s.n.~.. ws~u,a xmv wam.. x Kz~ ma w ....x m wF~n.< x>k cwuw...e w,.~ma ca.u.,. n .. ~...w n~u n..m~.. n~ ~~r ~.,eo.. ss
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51955 0261 c ~.a•Ww ~.a.,+we re.µe vvn.um w IW rt.aqw.+ kw ~ a~~~ ~we., 13 .~.aa. ~ Smoking hs~a >. s ~„«. ~
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51954 0258 Preface w.w+~ R .~./.,.~,..~. :r ` - , ,. i..w .. -.w L
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ttt9-zss tSOZ) ?Ltau?d5 v e6eM o.aaa[QO ~rt29M 'NW ' ~6u?XOws ;?nb pLnon atdoad 'u~nw oox se1 aua aanpai no~ ;? puno; ~aya pue •saiaa=e6?a 01 xe~ 6u[anpai uo a?pa}s a, aaxa P?p Rx~snpu? osaepoa a«p 3aya axene n0~ a=aM 'O _ salaaie6?a ia a; aXOws oa asooua 2ew sayaaxe6?s xe;-noi aXOws oa asooya oun aLdoad 'd?ysuO??eLa= Lesnea aua ano9e nOUX a~uop [ 'y cuo?adwnauoa aaaaie6?a , asea=aap aae ,asode=d e sasnea ~, aaaaie6?a e;0 ano a,a u pLa?~-46?y e aXea noh uaVn -- uos=ad e uaVn aeVa aae3 e aou ~? si O 'pawnsuoa ~ata enb ay> >aa;;e pinos s, d 'V sax ~R3NJ3H 'tlA eax . d e oa a[ bu?aeLax noR aiy ~ZI3M "Nw ~6u?XOws d0~s aq saop s,S?ppe anoV]?M saaaaie6?a iaa- oi eV uosiad e uaVS . suaddsw aeyn an0qe XTea s aa{ noyRUy x=ox naW ? Axoae=04c7 Leuo?aeN uaneVXOO=fl 'fiuxpea= 6u?asaia;u? awos Ro[ua ues noA os s?Xeua4a3 'sp o1 noF sa;ax L(,I 'FeXO 'O 2 iadxa l0 eaie Aw a0u s,ai 'H ~no~ axe no{; aseVd,ona B 9 Z HB-Z
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w~ :~ ~~; ~ ~ ~ ~ : ~ .~~,K,~k.,~..,,~,~,~Ra, ~ ,o .~ ~.~,. ..~~~,~~..,.~rc.~.,~ ,.~ ., ~ ,~
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.954 0259 pa wmswuuaaMam'y. ~6rcarcxm~npam~Mm mm.ar. rcaem m mae w.. m.~~i~a~m~ ~m n..atiauy ol aaW.m~ -~Kn. m.amo... ~. ._.~.... _ L.
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~M ~ = 11: ~ ~~~
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k.~..,.~~. L
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~ ~ ~h<Wneolru~ mWhawMan~ ing l1 ~ ~ u~~ w r vi hsln w mmc iw . poe.h'luY. Bs uup.Ya l
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1 Smoking as a Regulated Risky Decision L 51959 0262
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~v~' m,~
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Camets: . :
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uu wne ae.emi n InpY +Merchutrm
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~: ' a ~ -F .~,. ~ °~ ° .~.,.a~~. . L nuarawa M a•+4~<eqiwa
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I-
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3 Long-Term Trends in Attitudes toward Smoking 51954 v284
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1 zl;=.p==,=" ~.~
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1,; ~ww,~ ; -" ,,, - - a~- ~° ~-, ~~, -o.-. y
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- .1~-- : , ~ ,~~,~ ~ .~ a; - - I.- ~ .-
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4 smoking Risk Perceptions 5:954 0291
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Mrr~kiuk<.~ue.w' ae~~.l y~ ~rc ~ ~ . qry r; nm xfaYee w ma ua`e .R - .r~- . ~ ~; - ~ - M e ; ° ~ k: A - . n, - - - - i. k M 6etWu xukrylqiu.i~nan assessm.x arh;metbraMieg?CUMeyuue~lweri.kaiiuorwm W.nmukine~ie ~ J::ows+Trcan.enaaxmuu;oisa9md.eurm~e : e~yagyW in hAwo ~k, ae um~pmnu.~iVmm«rcahr famu Nwb.'eo.auW mmv~iy~mqY~uv. t~.qve'n~huilUeewv'urmiW:r:uuJi npRUep vdvrts uey m.k. wnP mRa m.nukine. miaaassoew rin MwCnA/ HNDIrvGS Ye aJm+a<r af ~ art ~Iry ~ ~ 3 aou:Yn Mv R~qle mk. t faer L
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, -K--- -11 ~ ~;aW h u' .~ 965i inll µaeuewn+Ka~ [`vav+~NeeM..m Re qmlie a .n ey a .YlwgniMeumi N WeJe<rcau ~n~ne krn W amwi.q
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s .- -- ,,-- ,a~
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adY~~~ ~ ~ .~ ~.:~.,.~..,w W~...
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P.~m,~n.„,~, ~ "; a~ „ ,. ~ I.- w =i N vx~w~-smw.r•n ~mmrvw+w m.w u ~e! ~~ • =wMwxv'uqnmw~w ~wea!w.,m~no~~moan'suv~r,m~w Rwnr~ ~!+.. ~tm~ rvww.m A mf ~m~xmnmo~~„~..prvm..qwapq~.ui m ~ iu. 1-mcu.+m.
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~s ~ a.aeaiyu{avexof.NmpMearlnl9n.wppn/a~unp4elY~ip assiplYWr~+p~aaurysrtamuinqf ~~Y I~: waM+'t Ras Mrr.xiun x~~eH...waw~s~.Wl sesi ; ...,..waaw ~ rw ~ mam~~ m u. Y ~ r w r re y.a... ar p, q . smyi`~mnmmWine~nall 6i µMme ( ~ irmNw 'R. m~ ~ of~m-~ .n.- xssM 1. ma ~m sM in wrx'Y r y x aue ro
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T 4 .-, n, " Po„ ~ <a v ' 4<"` „" -''° e ~
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~b ~' ~ tie .--.t. .,
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~M N <~d.. le~ m cum:k. ~ie nxeiae er M~n<ww, me.M+<smctiN.k<uiwaamkuqwbequed<mp<~r.i. ~i ..tu I w5. Ne. Vut unm mevd nm. ~wiu s sm~eY.. •~knmk s4+< ¢kp..e wrr<y _ lnewnpti R ~ e» plw,e emkr io ~11iM q...,: un~de. rK ~ .m ~wain.,, a. x ~ . d it<rw+ e n n*>•r ~karpaan.,o~edµcw~r...... mq p~. ~ke~o<.wc ~aan..knwn pixNwe. x pa<rr <aenWa rnni k< iamrr.., ~ imW<app< umpe~Nm<oaeam~mk aem~mm ni..~aix m as~x~exmnsa m~y u<srmyem~ns~~
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~..~......a ~. - ,E..,-- w..,.,- - .-
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grn..WH -v e. -W mcm:.... ee.Yi.ymar.n q.e.+iw. w h ~aeirelW. ~w+..Jew muu u.ekupeiv. ~iwr ~.iixine ac.arvAry a( ~le ~eywue.. lh ue rcpn.km, ru u IMxws:'Ih.ra.agn ~tle wln er im skq.ne mr~niidus m uudi.m. N~np c
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ar
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~ LO0 556t5
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-- w:.R...-
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M,161
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51954 0304 5 The Effect of Risks on Smoking Behavior arr.a ~w. ~,.~ wa ~
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51954 0315
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,~.~.,~ ~~,~.~o~...,~:~.~;~,.;-~.
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Si959 0320 6 Individual learning and Age Variations in Risk Perceptions and Smoking Decisions
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a rz>~ is,e~,aiarwem;.~uw~,uerniu ax.aa.,M..~u'a,uema -- rz°'. 1.- ~ ~M , ~ ~ .. ., -
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s"~'w< 51959 0305 we~awvvm +ww ~rum~a~ie~n..a.~:~~a s~n '°^ I W's ~...~.__a.an.~xunwmru.~rmm»iuu~ uv 'tniv.~.m.. i«mwF w c~ ~ W~s wu'rvuiwv u irc~~snuwvw~ s clrnmprcmaiouai wnwpww~«..n.LU.u~ae.ve~nvm s ~ ca mn ~ ne n w+va'r cmqutl e.aarvpm«~~ v„pk~mcweo~wc~am.~cs wwdma~a~~annamva«urc~ mu~~wmn.av. «.wiaw~w~. m q.a. u ~ c u. v.~ i wFxm ~w ci [wn ~ ~ ~ ~ rcnsvrc«uEwnmm..orircr nuw..e pw W~~s.« merme r~u¢oe mrv~p••mm.euaR~mc><w.cnen.en.ceci. ~ w ~~a~.~u imcw.cwa~tr.m ~
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'v"'O1'a~ ~ .wa.rcrn.rsesw.wurn.ceex...oe 51954 0316 ~ Tt~ ay...~+.a w~.uvu •m~aaow~ ~ow.n~as w m ~ ni . w'u~uw..mev u.L`~'=M irc+nw Wiu . e~ me.ue m an.rR ...un..u~w ~a wa~•• ~rcon..~iweuv a~~u. ee...m iw emu ~wa~~.~ m um arcm. Knu tiar w ww~iv~m.muux K.~- ww. - -w>-~m~. wi P^d. m a u w..nu ~wx~qK~
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,wW~r u:vw m. w~~....#mmnny ti~M em..n.~xa~p.arw~ va~.xnui..e.mo.eLea u ~ ~w¢ wnW ~ ,na ~ ~ w..^ex. Er ia,~ mJwb daMm.. m n~µir ~ ., ~m w.m~rc w n~Ny w iKVw ~:,n rercMpn xwn.yw~ M w a w .neue~ ~ ~e.w~x n an ~ e mi ~MK~ xaw'~~n.+neuar~mmr ~~ m~'~wa~n~ immn~M.~n tx`w.w r~i M. r nma rc.rc- ~i'~w+abm~.~nx..aIXl~wuw rca..xw.~mrcme.w~ ruu.mqe.me pepn. mr. rw e~ ~ ~ ut N . ~ ue mw mm:. .m u mawwna u~xiry v~ rsw ra.oy o
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51554 031"i n ers xeuapam. .x:aek _ w w ~ par:~a ~uwaM aa w i~n xme u. ~ uN.apndtre..Yx.aluifr~ xm i..u. rew eum pY . m0ert..'- m~uus rxn rc.pen w ruau4r mn q I)uun .w Viuwalssol ~d iia pe.peueulw.enmYinr.uy(uaumakal~9)w.Y.rs:e dqeem. xtJewWwarc.smPklm~MawaYnsswtir.a m jxeirt
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Rpm~ ra w~mm vi,, ..mxmmvvur. nu w wy, ~w..vn~~ Nn+ vq.ryV. i.umnwml. I+nl xW ~y ~ .r.~ w T~~+3rvM M'n9 ml w .wx~ao,lmm.9u`x)A>~ ms.wtlavalaSlairwapmpuMm v+eSwmm.rwve!va•r . .rdarwmn. ~wMq,ro+,M9-9,m11. m~~ prxirxs qPmM m, q9~ .n w,ry.dA irxMvqmaw .ryy,; V.u aur„ RulVnw,S u Vr+mV iulN„r.tl nup ~,wlPw.omM w. . +.w'nxNpenvmnlr~rvu.my w ronnunu,.pr/19qa A Ry~ Wqo,J 'N~SV,~9,!~ervTm+~.PA w~x..v puq u vpnan qeA1 tlord ~'ro ~w w.1 rvamM, un ww ~MM. vl~ wmv mV'm<~tl ,N 8~R^R,u mrn vu e.aa. m~~ g.a.o unaa Ironuqen aq veV p,murm avn.t„W rw ww i P°,n n R~!IqR+~1 MSIa w+mraf ~5 ~ ~ w pnca~w ~ .a.m.,W'm-.r wr.9+ad.p W mmv 9r,V.tl,9irvivw,o Ia1NnW xnexa,9qv, iry...r~qywaemw~w,p.rienp...w~xV~q'mrmw s-riPl I ,+~ wVw+M+hvuw.*n.Vn.apVxiS-enatmtwxM+xalit 5r:duVaumaauniow[ au~wns .<
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laeryiosmie.: v m e ~smemmy~bes~avaew w~~8~~ inepm~irq Wm+* ue.uamm swm~.im i ee aw~r.a,.5um. inwva P4t.~u.ww~mme ursweom~ampmw.,E..av ~ti ~FVpp~u,..nsn~gnenurrvw ...ucx Pw win.~nfF. m. ~ u. omePV.m i1s ~ ~ p,e.ue. m www.. a a. P i s S a u paetm..m t.r airt mF FFF[ar oF uN&~uo YFPCEVriOr<5 -1wiKr w ..u.v l h wpvr + ~ab ~mm~.we .nn x rcrmeeu ..,,.m.- P m. preem mme Pewtonsv~ 1IU5o~ c~~WewK a.umue •aaaw.~a? i j
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51959 0318 R d~ nat mv a ~ , .aw.-n - uw1. ~ rvn .5~ wM u y n Wi at e i:,` wp ~ . naw. u x~nmr aa.m m u~qK:.nw ~ tik auJ e~a~ mctu6 aaiwu.a~ppduo aw ippdw /wda~ eu~mau mu wo:aiou m iw~.iauP<. ne amatt wwe a iue.u.~ce M im ~n u. a~ rnima.em.a.<~. w~' y o.m. W
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51954 0321 .~o,<n wdw . m~< ~o aw .~mme .uwu e a u.~.im. w . ~rapx~. Wwm~iw,n~yeys..<~m~u mo, ~m ,.~ u« m wx .,w~. ra <.mwk. u.r a.<n~~~~ W M~«.<..on u.,<,~~.ea.. <r.k.iv wm tlw
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51954 0"s23 «« wHC cwcea.u..ucE.<w» ~,...<o„
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- I . - - -, : me xwo.,r,e...oe.u~um sauswn I
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~...or p~av <m64~w~ ~= wRr.e. em:es.~ m ~w n r c . ~=w~ ~~ u •~pd. m Feepa ary.euwrammma~.+.mumrNrwe+m ~ . 51954 0329
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I The Quest for Rational Risk-Taking Decisions m. - - ~ ~ M w. - ~ w- - 51959 0330
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elowm om ~ ..u »a ~d»w an~omnaqe mlm~apwnmaaim I M aiP. umaf°~X.. r3 • A/A °Thu-.M. u. °.IPT-n "ar/>vam~.!m m m+v mn an M' I~ an uaP °ryn+ ram. mmeqc w°'+ . m m ve..m »i 9 m N p m v 9ewa. vR+nl w mn a.l -~aaaa axvu a .we>,.( wo»'I,aMma i>U9a il.'M`Iw.eAaw»rcJm 1 .. VI. 9Z£0 656?S
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n~rNn.v m~+•a.w,wn ~a+ nmw . .W,p.H mpFinawxine~~n~,+A.Avl~;maea,n.p.atwa ~mm +v m•w<wv+w++~^^w.1mn „oraMro oeh ~. rt+ww wwsamMe.?mmn+!o m.q~, w+r+~w^!r+mKu+SSn.mv /a .+ow !m~+W ~m+a.. 5>usu3l?favx>3rdwr5 R ~ ' -N~~e r w w ~ Hi.a~ n ~z s~iw...f. z~ml••+rvsv !~oxu~.*u+mu!rm. ~~ .a r+!~.++anroa+n...o~am+ma ZZEO bS6T5
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~~ ~ .~arowm
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x.rrc.rmeai...~uam.b.w.xw a~baer,i. src.m...w<x...rvrw vsm m~ae a~v w m... n~L.~.ub ~ea rn~ 1 -' ~'' . ~ b wi <,u,oum p«<m,<a wbw. EY s.uxo.r.pvw~iiotw<s.5~rcxao aw.Ciwu.a <.qrc.. vxv<.m~x~wua aw~,tt u e.m.e~y..p+~.wm-uwrr.wawuu«omirouauam. i.a pmxedur. a aua nu <rcpt.«rtm. naiwxn m< arsc ..~.ee paaviely x eMCgemnv. wid ~zYiy G1u.iu iYlm.ine nA tdeb u upbrta url rcpnN." Neramews. Clupu 6 will rcpn mu~mqkuwna weY. Teepimplwe wnmaaul nLE.mana, esb a( rbrce ba . big[<. +n<M<+pm.dr «p~rc ~~nrcpn ann m~nnuu.as m~evea r~u u<ae ime.punvn a<w/u<m vnbne mup~ faaryaim a»] 5 iwe po[e.wdu wenyhm m. npciWieWr«rtma(uwaTE SLlrtenakaa.~x.mpi.inYY~aWi"< ~ inuJ.pm~..n.ele wde pe4 rvimk aa nqmn mb ~aie.<Lml fx~ W<pMO vr wou¢n5a<sigaifawlnalliMee<yuaion+. TOOVR. P&aab itrxrove wf f<.mek r<.niam ~o 5?9 0309
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nyu~~er°•ea.:Hm ~e `um.i x uW aa~rrrk.ron...ewrowrxaanot~e m.z peram~moac- ~ a n e~ i s wrnr,r. .i.me..,w~.ro e~ mev.rwke...erw~mttqw^m xe wntu~er. m s~ ww A mrvamn a~... ~ie i~e ~eaee ~.i ~erc.u.•r .m M rnb ude. x a . m~ ~ A,"r Mw.n~w^~r.nerir ~m•rca.nn wraieemb w.r<i >.pk:m
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wn . . s . eaaNS.ew ya~uqAm..,.w.,,ai.xwrwr,ni > uHrv ~~~»saxex~'sa~u.mwm~!~aw.w,mn ri,,. t.. ,Mwu un wi m~rv! n,wm•u ~wNO-en +n*.wu*uwn®urn •npu ~wpurw,quu.w~ rvn~ _ wN.rvunEU.w=su.+wasv,y"~. !m ~wa+q ~ un u• ~mm..m au+~iwwae aa...>n. sa ow7+ows
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q w ~.vm~'-swiuaw .~ rc nryw+ „6~. +m.....- or1 F.p~n:wzwl mwtlw.~ rcix.~pw cuonu~o=u.m>,pwr ~•F~qumm .r.d.a'Mwu.mmmr ~ ~ muN rwwur •m ~.x.u~ iany m ewoe.+Aw ~arc ~ ~ a M mu W+ s~wt~re w rts i n ei ovmwTe ....nu~M' ~wt a uw.airc t ~m tiwr ~Fµw~w a.va s~. iaw. a-er.pn p...~~mu.. ria~ ~rc .mi.uae<w. r 51954 0324
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w,,,,,.ww~,. Y., ~.- .
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. 51954 0327 ~a p^mixr ~u~w ~.y M..nwia q p~d~n rnM uexste~ne~eawmfwmeainmewxisx, nppemi.b[ us apmrm ru~awe w vrcp.r w wr Ye u.uW u.mia~wmns ~'me asuvl sn olnw+oau LuMwnofl'Ak~x-~i h smoxsx,°p,7 0.v~WB,rtisx~w.v.® .y ~mwu~w au~v,, vatumaia w.mw bx.r..nbe wwi.ovaee w~~uuuvr+aM^vww~awenu~.eMU.a~uRa
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I 0.~ e... .wu~.~ x. .. .aww S o u~x~~ 51954 0336
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51954 0337 APPENDIX A Text of Survey Instrument Used in Audits & Surveys Study w.,,.... H.,.. _
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5i954 0339 `mrram~.w:uw~ wf'. yny nmma+ w.a0aa.wnmwa u~mui.aewwa,k<~ra.as.u.~ x..:..c:...mu.~ ~ o n...a rww. m.rva
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0146
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51954 0345 Index
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51954 0340 Bibliography ~w ~ ~ v~. ..aw..a ~.. E...o..~.:~.
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5E1T BY-I1- : 5~91PN : %.C OFFICE^ 215 546 0943:. 3i19 reatlny famqtChe MvaMapa !1 Drug Free Workplace Act: 00 Policy Guidelines
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51954 0326 ~..,wm .uu...amuftaraiivr.m~mkaw ~ ~ ~ : eeJin Teue.m'imks ~aWrt h pn wnww mp~m w mm :y ~~r rt`w ~w m x~wvasx'smp~eru.. ~ o.m.huruem.yrurm ue rtwme pae. rsspwues.e. iyu+ uw^=nm• w uluprnm~p,rt.pw sm~ud~+u.mmo~ ~wo.w ae<^ai^a~ •a•u w. nn~qe. ik puw~~w u+umwv A~k wcEisxt nw~> n w w're e.d.akr k uu .urc wes.r m Iw tle ~ww~uw~~ umawmvm enm ut u. ncE~e-x~ m.pvwe.m mn.m.. m x SN~ue~ a vip~&w . uknv apm w er w~maw sum~ rw u. simuu.mma ~~ n~ _ m m a e mnkreax~lwirc p pi sen r ~ pnrawrw A n. aua. vu.n a Wii MY krgs ~ . r~me2rW*~^vs^"T w.~Mrx..ailG.ercunuve repmaiu xapau~neain .bkM-xM ~~ ~ imMyue, kuim~rvmenulruuueanwwia ~ p p Ix6x1.Wmpask~+wln~nesGE~hxiaye.erwp.W my ~w.Tluµuumslmw.~xs.nvpuwmurlmaieTmkiSk
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1 51954 0332 m. Wa..we.norvuvur...uvco[cawxs d~ f ~ ~ w a. .ru i w .+~ ws~~re u+a ~w ~ mw ieaw p~y~ wap ~fwu.erws: f a ~ w av ~ w ~ .fretm tiwar i ar y beia~.rced e~s.wmwuws~em ~p w~.pmaer+a+++e .w.uwu.uas~ ua¢oe.nmtvineiw- .~.a tw a wma'w..rtam, pwewi ar ~oe ~a. imo x nat . p~e.e ~+w'Q W uwsw nay....p m ns n ~e a ~s i i wswwuawaww dua oa.pnmcr.:¢ - a tn ieu pamrcN w p •p~.wcxw ~wxwoEwwca reow ew~Mq•~~n mw r< wa Wwwa_u.~~~ ~µc. n eiewr wa~ciw ~aa.. h~ xw. '- •rcpmwniiie.wrwrww'v.:.mai.waeeaew<~cww..efenne u~pcn - x w~cur..~wwm..e
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SE~T BY'11- t-96 : 5~3IPM : PI-C OfFICE- 21i Sab U9i2'= a,i9 iM VM lak+Fw<e CONTENTS I. PM USASales Fortc Drug AbuM Policy ll. Drugs and tM1elr Effa~ Common Queszions and Arnwers Cornmody Abused Druga Alcohol Barbitunrea varcona Coczme Cnck Amphetamines Marijua Halluclnogena ill. Sources of Help for DNg efld Alwhol Paoblems a 51954 0349
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y;954 0342 R. a c.r:+s v w ~ .. w vw.w. w... ~~sw. rN~~w xew~+w.. wa wW, ~b~..~a nu U~ew'w~sma06 c.~~x r~ wa wu. M. v:nrx...or Nw ewHa'.Nwd ~~. c.w~ N=xw.eva.wr e~..a. ~IW.'r u.n cwve~ ~ee nmwm N Im N.u~wa cls.µnw.~eumr wcmw.a. Fmn nrt cuw:uo. xuw nP'r. 1. u~ wMSm+ ...m.+..wr ~ c xu wu £/vu. wweya., o - _ rac+~s.ew.w:'e..~rvrxewm w r+m a~swar we usaaw~ w~un~.w~..e.c~ ~. +.1v.nwury3c.n.~in~.-.ua-avun..wc«vuoeinve..
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swt Qusr tw uswrvns viw..uwc o[auorvs amy aPwry w m eee «.pw.~e r p ...i.r«~m.~naw.ww~u..~~cwssv«c ma ay..eau. m n...Pp.«. m w.to ~m ~ ~ e e ~ n zm e'l. ip w mi u. hmaen ~u4ma ~P e ~ w:tap>eatise.aw«nl•+wa~..mxw:maim~:n... si.a- eemfl~.enMw+uunm w a. mw e ac. w• ~•• aa nrmwan wwa <mue x« ey Mn.x.. w w e aa aWr wrce w~+~ n. mvebv w.< wmo+vwn a~~i~f«Wbx.... ~s. cw«++ nvw'~ry a~~~ ,tu ~u.asaoe* M nual~w «wwt++~ww~ e rveniaw tw.n. t.« ~~nk w~n ..eK.. ervia~a~'«..w~mrs.nta.nma.nvw nan ~ s q .nar~«..~.r~.aaaea~awwe wwwr 51959 0330
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51955 0351 =.Wrzl w ww+~+a.«du. J~N~ awcis.ma®.w. ~+W~NUw~. mveWiml' ~x~..mi~T..¢-+~.w..rywoei wre. ca..+nw ~nr..pJrusvs.•.c.wJ.a ' yrn.JSwx.~s:~w '+ev.Jhvsorv..^nw.x.m~mH:sr vwuv.A ~R.1 ~1.'n<us. vrarrwarsvmm..: h<ratSwicJ uro taiy. M nm.wuu.~w-ww+.wm~ •vMxJ/m'Wwi.~xu.i u.~.m. ~y, xmwaw.w.m.b w. s.sm~.r f..emm. ws~~'n t~~wi> ~e ~ v.c~a~w.u+rmaa umYnqxsn ~Yw ~ wmu.n.rCmaN:~ E.~ a«e ~xnmawoeanm:rww6riJJ fy.E.T11- wp.vmwPelJM.r'KM~.ec........~xl.):.»sN. ~xowJw [~wai.un..R.'ww~.e.v~rwcn.w~ .xWmeur. swww.xwMn.wiv~~F-+v. x na: n~J1 mn. .a.w r. ~~s~q,.p..y, amw
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51954 0343 ~ W ~ w u ...ur.vr xte ~J ~ x w w no- ~ .w /+sa~,s .u mw ~ r ~m yxrr+~.. i- „~.a c•w~~® ivuv, w. u. s. ~ aexe Tw'.m ~~ w~ s. .wr.r . ~sweo..Nn~inu.crvaKn~s..K.M ~e~w~a k u w.W... s..~«cm..a. w..a.em. u.c~u ~ qss+ro.~~ umaw~.c..~u. eon x.pw nJ~a~u.~s.em.cmn. wm eu. uc.. cs.m.a.. 1
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,.xw a„m e, „ l ~ 1uwm a,g~1w~1 Hv+.f~^o°'.~*.weww~+,mo•~rc,c A.womaur~w~ ~a ~ - A- ..,.we.-s1mx.,+mrcm aw ~ w. ~ ~ wA~~~wwra•'+w.v b ~~a~ ~..nmr+~,mrv £££0 bS6,S
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~ rPdavrte~.a•+mlwrwvyxwusrerl~ W~ ~ mvy t.a wh iw w~ r~r m . w.we rewrane eosaiNrurw rcPw ~w~ re yyw.eguuwe.cn~.a~ytru~vm~ustreu srima umiwpae umiw ma.e.NV Mruka, wro ss~Nme irom u.ww. rWUaerr.a.cssvir.rs ~ur.~uq'muuxuesv:nre.v~u.. ~e~~r~.~iurn~ .~m 68wamw w'.~.mu.rrwp u.+d:uMN.qwwev Pwv wvwWw.w..dr.imrutauua+..ru wwm -r eu..e..u.er h •8..aw 8 mIeImrn w,.'lubP'wliolw wvfy M mNUea. ryw: w'n.enu. Nr.um uW 8~um m mu.Nx.. weee ure rv4 w~m ny~wt~wao.CanA~~.vY usNwYU'r. uhnpWUnw ~• kaewg.a(NUry u~e iom tm cg n ~~~uaSr veue. Mwm~.ineoehem: wyhiaeNw...ignewf . ~- w dmN waw MiP In rn nM~e ~ tl q~ . rm awYe mm Pssua tlxauee 51955 0339
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~~Y4T~,~ltavukra~~u ~ J» iE4.y...x.wm:x./.+.WwYxvwnYar.. v s ~C.mk+n: xu.ut uarwr Na. - :r~ x..wafsAn.re.w4l.r..cw. i iW++. cWV.r .waWm. v+ww, o.C.:.mw E.. - -Itwl.usaxmatikWlkwaw..~/~y~u_. swdR~.wx=m:usiwuuwa~~.~~9la~ac..wm.. Aw - 9Wp'MUwsrcnweku.x'nvr:z'w ~ aaev.n. wJakv.m v....mw zizxi~ila~P~~ u.m..u.r. xwrT wvw N aa~~..~ u~..+n vil xapnu. u~ ~kwa xuta; ~-.y.vuum~.xetE1xrszPmws.uv~Ymxm.'am..d e~~1ve•~v~aPw.uxlm:n.c me u.-s'P~~rm N.w: x..w.~5.6 ..e G:.we wxe~. a~rm zuuPrnmwn v we.mmwWr v ~~.~~w lr. ^ cwr 51954 0344 . ~ ~ zi~ aYUwr.xur.wu.:.wn .. ~w.misuwwv... ~ ~T~ amuv uar.v. ww. nrr. wd~ zmnWw~e.x..saxnurm...•• l.s.uw s ~e n .d xeY•~• u llwuu ziwtw W~w d xwu 1
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sm ~'~ I 519"y 0335 .ns qug wv gn.rons ux..uinc ottwrns .wpJ.Wr w g.~.~u drrcm~i: Jw wr eme..a~kJ~. rcM~+piga.me an:p,. mua+•kJ M~k w: r.n~ wm~nee~eec.u a emmme, m~. pmin mu dm..xa nu.r us Jeu xain Jwk. erc..m.. mj.nnim..ew. M ~ d ex.w~ m Je s+ ~u..w wm.wa.a u..nKw a...V ~rc. u. e ue ®.. m..+ssn pam.: s q.~m.mu a..~rvuu~a~J..v~v~we~`w~ +ra.art. ap..vamµm~mran~mwmi..am~n awu..%~.m.m w. e.dm nac wn:v. m B ~ ~ w me dessdro ema uq mpm .J.me imot we dweemu h ~w .mrmmel. kIW.n3 manan. Aknwe! wdw vrN immv. mW Yi.vumeew~wemudmxvlm~~rcwWtl4l.uwem+. Syp¢rN re ngudss ukq i.fwvnim .of ine ee+eMqom aI rcalmw~waabm ~ ue p+ey fn a mm-a'ai arciey i - usnu - E- ew.m wknqaaiwvne u tpaw., e¢•Jel9xt v.eNewk. M N~~~.~^u+.4u fam. du'. epv.ge. Anmiekug Weeansua uwilany w w. ~9st m~ manssieg ofJe MummWm.J6uo9 em m art / .~Nn a~ F JY ~ ~ truemf q s+ memmx Pow<~ea mv u~es.niwlY Guange uidY mmwuxm. u.wJ.pknCeu~eof gu putlo.<any~Je o~yx~ s~mking ruk .wlung /wm Je ob muptlsy ~ ~ rcJNi.r +mFea .m'K~ NMkgui3 . ~ ~ we ~ e. vma W n.sw rc..rc ~ ~ w u.e w.e~mnma.. rw vd... w.. .w au ig -
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~- V- ~ az 46
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11- t-% : i~JIPM : K< OFFICE- 213 3i6 091?, 3 Is PHILIP MORRIS Dear Fetlow Empioyee: Drug abuse continues to present a us problem for o ciety, induding todys business wodd. tndividuals who use dmgs mn be a rMeat to thenu'elvcs and ro orhets in the workplace. Philip Morris U.S.A. suives to ensure safe and healrh[ 1 working conditlons for all our empioyees. 1. keeping with this effort, we have alwrys prohibited drug ose and related acrs, such as glving or selling drugs, in dre workplzce. Our Drug Abuse Policy has rccentiy been updated, and contains some important changca. The updated policy is ncluded in the brochure ompanying this icncr. In addition, the brochure tonrains infornutlon oncdifferent types of drugs, their etfecrs, and thcly dangers. Infotmauon on sources of help with dnig prnMeme ls included as wdl. Please rake thc time to re•lew the contents of this brochure carefully. Atl employees are responsible for undersnnding and adhering fuliy ro dte Dmg Abuse Policy. PMlip Monis U.gA. c ro srand by its commltment [o mainraln asafe workplace. We arc confldem thn uur updated Dtug Abuse Pollcy, and educauonal eRorts such as Ws brochure, will cnntributc tt+ the maintetunce of a safe and healtlY 1 work envirorutsnt. 51954 030
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Methodology
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eA. V-'7, 41a v ATTITUDES TOWARD CIGARETTE SMOKING Prepared For: ARNOLD & PORTER/ JONES, DAY, REAVIS & POGUE FEBRUARY 1997 SURVEY DIVISION 1 ' UDITS & --A URVEYS "'ORLDWIOE Sdentt/oFlheAtlnlMeIXelinp n> Autli!s d Surveys 9~IICmC •650 Avenue o! tne Ameiss N- YOrk.NY 10- •21 P-621-5100•Fax:212-62i-2034
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Tabulations
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The resulte conteined in this report are bued on interviews cunduc[ed frcm Februery 7.9, 1997. A total of 1,013 fntervlews were completed, 529 with femele adults snd 484 with mele adults. The client's questionnaire is shnwn on the next page, with tebulet reeulta following. sw..et.eoun.e
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AmWd & eoneNlones, Day, 2eavis & engue commissioaed Audits & Svrveya wondwide, Inc. (AS W) to cakoct a rcseaech atWy nv adWt Americaos' udmdea tuwerd ugartttc smoking. ASWdesignedtbequcstiome'uc,supuvisWSheEeldxrotk,azd.vssrcspoosible fnt pcoLucwg 6nn1 mbWUioos. ILe interviews werc cnnducted dusiog [be period Febmsty ]• 9,1991 wit6 s munnally rcPrcsentative samPk of 1,O13 edWts (3g yean ns ulda). 7LC fo0owiug proHdes a deuilW tlescsipliou ofthe rcxescL melhodology, the quesfiomutrc, and the finel abWerias.
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WBS-[K CCtO 6IIP/L206 AwaRRl~I^+'~PadAWaAmI'd 195 L rod'O'd Yaym6pcp dnwp ApmtJn-rzN aa1pq y(F695[~l 8[Utt 6IaA^'-'N'IVOANaN ~mn5~rompp 298 ro0 O d tevmhp°9 duwD AOmed oNeR'/vo W iY +^+~9YPWAYnAuQA9WMlWeRP'M~uffi S S@lAtldUNYd'/WY3 'dnor9 4vrvp m'.fLap'.'appPel rvainon manMro NfN 9@daq Imq apY N ml dray uoq; ye ra,.va. pv- xLwR wddm ,wddq, 1aa'+w ^~rae.d e.~ an "° wsp.wrtanJ roanw w+ P>mw'o!If - . ~~~~'1'^ol~~°PI>'qv8^~M~'lo'IV+a~ '8'^PW t2pm AoDaqp 3uc4EarA ~ mM n vra a.ixlJ s+i "LL '='Nh d MwR ~° hV 4N+dI'4 ~ °n 4N4' uN- t^OI4t - PNayc. - ve aa4i 6~IIIlOSd! AIAI(IW WOJ dFNP-^M pjq! ifi.4 "0 W!
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i I,' f sws vaa~.w zss sr [ssnzinwis [~ana nv~z. xn.un 51954 03'i6 l l W h M I l W l I l h W h'°~ t I o a t o z o z o t ~ x x [ xxnrta aJ~un s.w zeet t nunwe[~ M~~ ~r'~
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51954 05'i"i el l U h / N h/ Wv W h h U h W 'W/w x x o 0 0 o x o 0 0 o a xMSxx Wm(x x.W x x f [ x s x l 4 0 1 Sa r~ o S a ssM ~u s a e s f9 K e s xw xWYnx. aspLnhtw
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51954 0379 + a x o + c c s s c s + e a~ecvmioas.w .~rvnn ....>mi.remo
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51954 0378 l h h! h h N h! h h h h[ '~~~w t p ~ z f l • o p f4 ane3laJM/tll..ot wrvna n1wmMe,wp
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DoxIT axDw ................ ...(1-dk ..mok.r>~YUCDaD cu<T xvem[xos~LDV. e[ Dox T twDV waae<uxu°sciow., 9 DDx.T axDx ...................1J-dk ~<DxTixus, . tnink tE. 11[. cap.et.ny. toz cTe ..ill d evez g ma .mek.r~tlXCOAD Sw.CE Nulmea BCLOii.) YLARs D-t p1oN ...... .............(1-dk tne tollov q ataqor a. Sccluda. yeu> (a2AD LIST. kSCDRD DNLY Q~ -"LIc axwl A cuanSNT <IC(wSTTB Sxorcek ..................I . .. 11-1 x - <IC,waTTS SxD2k ....................... ll-S ttevea S.ouD ciwuxea Sacututc................ fi-I -so .........................................11-r.t oox•r xsox ......................................f1-dk
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pII,,{I/ 5195q 0380 '+'' i iir.n vwtvm zss w zLwztnww ..aoo wzLixz xn .vn e,fy / M1 h h N N N N h W '~L^~ L v o o . a o o s o L o x xvou'n a/az L.wa xLi ta a S et4 L el est ut [Lt M pwbv w x~wvsn ~'•.M/Mlxiuv
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51955 0382 xnvnn e~no~w/nsavu
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51954 0381 I h N l W h l h f/ h l h l.l - t+^m'i t u c c t x s c s t e • Y tt nx x~ wvu[n noohrwno
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The rew data ace welghted by a eu tom deslgned computer program which automatically develops a welghting factor for eech respondent This procedure employs flve variebles: age, awt education, race and geographic region. Each interview is easigned e single weight derlved from the relatimuldp between the actuel proportion of the population with its specifc eombimtion of ege, se , educatinn, rece and geugrephic cheraoterietice end the proportion in our sample that week. Tebulsr resuits show both weighted end unvreighted basee for these demograpktie verieblee. Secause of the use of rigid end repliceble esmpling, fleld, and weighting proeeduree, ell OmniTel studias are peretlel to one anotdter. Thle effords the opportunity to draw trend wmperlsone, es well es point-indime enslysis. In eddition to the etandsrd breakdcmu by ee; ege, income and region, the following clessi6eetion iteme have been obtained end sre evsilsble to eubecribere: n Nine Ceneve Regione u Femily Sixe/Cnmpoeition o Metro Area Vs. Non-Metro o Heeds of Houeehold o Nielsen County CleseiSoetians o Merital Status o ADI Affilietiune . o Raos o MSA AfHliadooe a Emptnyment Stntue o Time Zuw o Education o Home Oanenhip o Cable TV o primery Shopper, ..uyaeteaxe
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exraWwn.a irtsunx e..reai r ow/n uvax v..s. y r.. r.e t.r u t~ to a.~ x.e t.v r.. r.f r.! o.i o.r is r.e o.~ E8E0 656t5 ~• uz unns vuor. srarrscxs<.r xa wieun u'rt.
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T: ll- 1-% : 9:JRPM : RC OFTICE- ~~- ~- 313 Si6 09iR:a18r19 SwrzesdMelp .. _._ .. ~MVS1SoksFacV fII. Sources of Help for Dng and Alcohol Problems PhJiD Mrvii. rywiJu u, Pn¢do/ee Acrivns Pmy~m PAP) u a ryn d h&sciks Phrs TheEAPhartiemlxrviceGu«unel4ngxeNwwmeu'piopana. The4'P+ 0( xoscs qOUiGcd Iry Ec FAP u murcw; xd'urhde ss~ ad(s Nug xd ,i~ xw.~e.m wk~a w~rea.,m..m~ ®xT onN x~l a~a,ke. n.~ea The uP csw~drC Sa. b6c~ndcm, zm mnnacmYl s~eml auNm rrc Szka R'~ em~OrresamucefNWt. Nn wc lo Wc fumY+oP vN kooa q Mru, w MryYUUaG Ihc FAP. AddNioml Idomefan sbw[ Uc fAP b-~Nc fmn h Muron PeWVica-Baka d:.paM1rteoc NAl1O'NALMEiOI)R(tS In/orrmsion,A/ kHwlius,ard5~n4wuys .UcohnpW ,booymoux Wor/d ScMtts PA. Box 459 Grud 5emnt SaSOn Nev Ywk, Nex' York 10163 (212) 69611 W CttWOeMOn}moui 1~31).8959ro6{Re NamoUO Anooymoos P.O Bo. 9939 van Nuys, (]li(omu 914. (BIB) f6639S1 NaYwal WwidlooAlcoboLL.maod ne,~ uepeoem~Y Iaw.NCAUU wu.rree Nat1oY.1 /wOave on OxuS Abue Vodine 12V6CdR.HEIP miWee Amv/m tooodl oo AkohN4m Nel~bx 1~5P-$N4 bli-(rtc Buu c,an<-An wuem.uen anE Me(em.INOWne v800[DGQlB bll.[ree -S 51954 0369
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It- t-% . 5'J6PM : PLC OPPifE- 2l3 3i6 n9-e 111. PM Ui1 falea i«a ~_ or~a o U. Drugg and their Effects Wbm4oErvgl A drv8 u a~ry chnoial a~.Wrce, ru,nl or ryWxdc. whkh prAUre- phyacd, menul. ewunw, oe behavioN eAznge in Ne ucr. I wmm t. de.g m.,eg Drvg abux is Ne usc Na &ug /oratlxfNun mcdiaml purpmea c'hkh wlu In Ih ' Impaued phyakal, nennl, ennticml, «mtial csll-0eing of Ne urer. I[htrb Oruga ars a5uard) scohol, Mbilurao-s, narcoiicr, ampheumines, mrawc, cnck, ~rijuaru, and Mlluanu gcn. are ortang tM ~rox mmnw0y abuscd dnq; alrhaugh Ne Ga a endkv. De~gs wluch nn bc kp Ily prtscnbed kr ne tianal pupmn on alm be abuud, Nnwgh muuse orux by.wnronc oNcr Nan Ne person far wbm Ne dnig vns prescdbed. . 'FWbmrsGn{galdWx) faeberaadl0 baN¢mPbl'aknlmRA 'prycbobl'ea/CepeGenceg D/ug addinion is a rtrm Chen ur.d mdrtmbe a usefa'phyaial' dependerse un a dng. Physiol drrg6ependcnee utbarsr¢tled bY PSy+ab6RW d-g-. Yn which Ne bWyb:comousedloadngandnecdsitbPoncdon. aTenNeirAivWualaropeWdng Ne dv6. he a ahe wID apsieMe wilhdnnl rympams, fuch a vomiY g, rrtnas, aiine. iruomnq cM prsslblY, mnvulcans. The ¢~m u BraduallY bcing rcpla6d wIN Ne - gerere leim •drug OependeMe'. Drvg dzizndentt u Nc nxd for a drvg whkh rtadu frum wwirwous ur pcriodk u+e of Jm dru& and rmy induic bah phystal and pryclniogld dcpWerc<. Prychob&. ol dcpendcrce nmur when an Indivllual feelc a drug LL rceded N oNcr m fsI gmd, nnmwl, or Aiu'ger bf. Psyshebgial v4hEnwal U ebnc¢rlsM bY anakry ard mvingr, boN of wbkh may he eeunrcty in<cwe.
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-s- 11 ,<~iPe~TfL. BxeRlx< x=Lt .e.= tt =y BBeB B. . Pe%eB B ..................................................... cxcRRcxT axcxlx0 is Oxtt0en0UB SO n Peu-s xewtB....... 11-3 I)-= II-dk ~TZB BEeE3Bm =B B a.eB n PBBB.B.B .E s. ., BB, Bet BkBeEneqB ................................................ tl-3 cl0usxrs BEOxlxc =. xOT Bn0 ion a PE-B Bnki.Tn........ Ii-3 11.= ILak czcxae:re Bn0alx0 <aOBES rv.T TEeS ........................ tl-, :)-= 1i-dk v.ry f n.ey c de y°u tAink xill a S CT EvERx 00 <30MErxe .eOUnE IBKSP a0 4. =/ eB 3 Oou•2 xuoW ...................(1-ak ,<OnTfxu6/ y vt Yc uv B d°vm oyxlungRlca°. m.ey Uo eyofsnkav.ry (#COnp ew.<S . 3 otqar.Lt. .m°k n, a Lnank xiii an<arBEeeevs Nuqea BELwtI x OT BPEAY l00 ciOnM1CYIE Bno%GS W Oox•i axOw ...................tl-dk msnY of t m Qo y tAlnk vill 6te trem i°n~°co~°e`riMAnu`rs`Eanie%~ar'e`ir ow~i°iwox~r, ucou Bef.ox.l x Or eVEnr 300 cxOMETTE BNO]¢u6 (BKSP TO 0. al 00 ur b.a ..elmat. xill ao. m.ny~ o c[ .x.ry 100 eiq.r.LL. , d° eex dl.....~ s Y o . illness°b_L atMYr.mok.°ciqerau=Ax(NSOM E%ACS xve®CR°BELOn.I° . T OT EKBy 300 CSOeBBSSE sMORU OV - maox ................. ..()-dk a. (uE rrxwte nfa) . y0e0 ~y koev, . v.q. xl.y..r ata tam.1. x ula t.a te~sM aq. o! e. t dc Yeu tdink LA. 1~lf. .xp.e ~1. i~c tA. . .9. famsi. .mo r= (M1ECOFD s1V.Ct NVI®Ea BCIAX. T WOIi'. 09D 6LON.) ~ 4LM8 (ERSP TO 0. B/ oox~S RPax ...................(1-dk (COf"tixUGl
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sE T 9, : fl- 1-% : s:&1PM : PLC OfF- zfs sas asiz:irons gMgsandiMeFAects . .. PMUl4fckslaa Wbmise4n6oWm) Pbn4ancleobogcl M« P=nsaBrceJaraperonAasapmblemwid,skvro4oriauskohn4c,V t) he or she nmos absoin (s g., fNs tlat ie w she wmct ges Amugh Ae day, ^'gh4 cvcnt e¢., wld~an a d~iNJ, OR I) bc or she ama eowol hu os Irr drvikinF f<&b onsble m sup Ninking af~cr onc 0r rw0 drWb), Og 1) hu or hea d~g has a negawe impan 0v famiin, fiieMS, sM pb., mbYdope ~abwedrvgs) iLerearem.nYbwns. s mepcepie.vi.bwbck~etlnrdrvgsonbeipdrcm'esnpc' (mm rerooro, pmbkrm, aM rntlq. 00ntinvwu uri.l psessurts aM pcir iMuemssylaYamie. ThuufvNSUhrlywefaYa+ngpeWk.ilrtmughlinnwM~ ence all of us. In addisun, nniry drcgs an bc eEhusd wM ichtirc raec. Continuass use of dvgs leads b nNes, esueaely pazsfW ~r6sn. m mnunue m we, noublY ~ sremming fmm physlol ard/or prychob8~i dependena. fa rt dange.our ro wr drogt dunng pegeonay/ Iimmicert+Nlynnbe Pregnax.romeneheWdb:ezuemlyauoauabmauldng any drog eren upiiin, wilwus f mardting ihe'vphy'saisn, lslspoaNbierogesnedlcNbelDl dsugyrnb7muvdbouagesbr4fNCfagef rrou66) a. There arc rcgulagoiu wNic4 Prwca u,e cwdxknWlxY uf paeno- ~n unvrcm. Donon, pryrldo8~s, aM diug w~mns as¢n art ieqiered bY Pedaal bw ~e Pap md'ideMSl anY Irdwmauon obuined Imm paslenn, fioxver, in aemin cinweunas ~he law does albw for dixloswe, so dut for exampie, orherd¢ton ao o-ns Ute Pa~iem~ornWiinwanttpmvidersnnp~'iJebancf .Ot4benmd'sicuvdasc .ssves wid, yow healih cue Fmvidesl ® 51954 0355
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OMNITEL OmniTel ia a weekiy nationel telephone omnibus service of BruakiNGnldring Besearah. The sample for each week's OmNTei wave coneuts of 1.000 completed interviewse made up of male and femele adults (In approximataly equal number), ell 18 years of age and ovet. All interviews are condueted by telephone from four Bruakind(ioldring $esearch sitex Edison. New Jersey, Appleton, Wisconsin, Ft. Worth, Teaes and Stockton, California. Together, the four sites have a full•Nme eapacity of 120 lines, and utilize an interviewing procedure ktwwn ea CATI • Computer Assieted Telephone Intarviewing. Interviewere have been professionally trained and ere c.ontinuouely moNtured and supervteed. Each OmntTel study Is besed on a random digit dialing (RDD) probability semple of all telephone households In the continental United Ststes. The BDD sempling eyetem is totally comp¢ter based and providee en equal probability of selection for each and every telephone houashold. Thue, the eample represente telephona householde with both listed and unlieted pbonee in their proper proportiotu. All sampla numbers eelected by thia proeedure ere subject to en original end at leant four foliow•up attempts to romplete an interview. All date are entered and eleaned through the CATI eystem during the interviewing procese. Thue, thie prooeee eliminetee the editing and keypuneh operatione. All wmpleted intezviewe are weighted to eneure aceurete end reliebla repreeentation of the total population, 18 yean and oldor. awt.nywWIMO
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51954 0384 f l l W W l / h W eh- h l- N- l-N.- '~'w ~"^~f°xiebiv R x . x oz s ` s` u ~` v` s~ e x x `s ~xv asa xmsn 7wnm/eumv
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11- 1-% : -RPY ~ PLC o0F1CE- 21c Sib 49it:a1i/Is IM Y- iaksgace Ong.andduvEll.s DRUG: Cocaine 1¢f1/ODOPC9N5lID1P1'ION:Iidu6tion,dyttuo4lryeemn. Nns~mledina(om oliae•rN~ba:'. rreebaK~m.mDN~,kr>md~.gwtwf~m:iavu fuieu anY m ger ur dn:g m~ bnin and Ikrcfae Mentk quidvx'LwA•. JITPCr N.UD: cotr, bioa,.-, mor vPPas: Ircrzued wn(dcrxe and P1aan xewc d pmr. wo'1 eknWR seNe of enerBY aid akmcv lu<e benn apcud. D-dapP~Rod *xlgkba. eMny. vnubOhy..wspkbruncss, und imomeh lurc bttn rtporcd uxtl, artoog rtg+he PSYCNOtOGiC.1g DEPINDPNCL tt. PtlY51Ut DP?BNUFNCE: !.o dor c.idcnR MVPxg&OVPPLOSE PPACT[ONg: Pun:wianawuummon. nhcaaPei JdrcgWrru.e,d.Pmionm.yemuoWn uon wM1ict, wy Ce uverc, ewing uzn ro rtwn u Ihe dotg. Binne bebvlof has also bnn npokd, u wcll u MlWCivtiaos af mude slgM, las¢, anE s:rcY. Ileery, rcpca¢d dwcs may o-igger yychais in users aho en: pmM m mcwl insabWty. Rcpn~ed inhahtion oflcn avulu in i•wtion d Ae nosW erd nu+l mertbnrc<. Injcc~ion wiN nonvzAc eqwimnt an awe beqYLL.a alter inkabn Coeinc 4 mtlc, Nthough nrc, woirc ov<desc dewhs barc occwrtd fmm'uhection. inlubYon, and ingestion af Nc dN& MpInN' ua mWr ef sersmeslollo>cd by rtsDin'nrv or ardiu artee Preebue uttn appear m foem:M woogut psy hobgid depmdencks of aIl <oealne , and appear leas abk or viWng io m:ucl Ihe4 use d ye d-g DRUG: Crack W.T110D OP CoASUMPflON: Smokcd. ~ ~ r r„r.remm rh<M~ i r Ldwia~.~~an ._ m 51954 0359
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51959 ~386 l z c ~ . t c c n a u ezx mzmn •.•remhrano
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SEl 8Y- II- 1-% '. 6-J9Pk : PL< OFFICE- -ta .a6 09a-.- 51. tM USA sda, Iace A Apyur.Unm, Me.ewpbyinent Drvg sc.empg Au pmspeceve Sale. Fortc Pmpbyecs ase rcQa'ucd w aucceAuuy mmplac a pm employment drcg ~ prbr ro being aacpleL for ampkrywu wb PWip Moms U 5 A. .tppucwr, nppYunu for cnrpbynen, mll bc adrised d Nc Com{mYs posWOn ~ n:gaN u i81s pilry and complun.< cvA Ne fcdcr.l DrvgPrtc ®«kph, An nf t99g. z Pbyeeessmm~cePmg.mn PnJipM -wlg ,hev~recowiCcrauanuenpbyec.withdrvE~a^~ncY pmblemx ' Joe cmploye<sbvlnewhcrhealJspmhkm.. AcuveFy.ecking ' W pe wSw~A p bedwurcnreglmcncNioaplarean empby pb - kM<c' .wla' 0f the Ce~~ Y Drvg Abiue pdiry pmr n see.4 ng rthabiliution aM axuaance, u~risfana~ pedomvMe, areMarce. pmciunLry, w beharronl pmblem may ylaa Ne empbyeci pb in jenpudl. ~+en d rbe prtxnbed ucaorcn[ u folbwed. PtWip Nmw pmvides an G~pbyee Assi~'wcc Pmgnm, a mnfideotial rcfemA for unxWg xnd/or vruurcnl pmgr.mr, az a part of Rs Berufu Plw. INomuuon vbow Jie Employcc nttulancc PABnm u pmvidcd in Na Empbyce Nandbook, and's awtlabk fsom ~hc 1{wren Re-sovrtts-Sxlesdepa- Fmpbyees v6o a¢ expeikntlng pmbiws vig~ dmp art suanRly enmweged m rseke ua of Nc Pmploycc Avum<c Psogram N a,dcr m arold vlolaring Jc Conp°ny Dn,g nEux ~Nry. Employcc panitlpaLL n in tle przrgnm aM adheseott w sbe presvmed rchabJimuon pmgram.,ill le gireo acnau ronuderaticn In ury employmev detlswn nvolvlnR dmg wc. Au, wch pvildpauo~ does rol s:cmµ she.mpbycc fmmduci- pbnc. and it does na Ipersede she Compnys dght u dstlpline an empioyee for rinlarinna or ~M1e poliry. M 51954 0351
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51954 0365 z u en .m v ss r6n w m v s zs µm ssn 9w s ss pss r a esn km ~ xrr ¢ n ux c w os s e~ s x ~ a ss us wu.aWiewi.xw xrnnn a~~w'm/x~~m
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1M USL Soles iwc~ tl.1-56 'S-28Pk '. FLC OFFIC£- 210 'sa6 U31t:a11/19 DRUG Akohol Cnga crd Aai [Nttk COPY tstEC~ tNfuily,aknM1nluanqwGUSarvlrctua.nuepeople. P«aben,nkuhnlaDWaio lureaatim.daung<Recc neun~Hbvmkcnedaodkmbnrtk i,whichn.9nwe art(rtt fee4ng AkoholdepessssaNViryinNecenrr.lnenwuryau:maaAacuf bECpiccaniviry in ft¢ puuof Jc bnln -d wIN ¢VaanWl, dartasng inlJbWOns, In bigeranvunu, nkohol can dsdt snmtlwu aid xriwnP) urpmr ncocry aM pdge- n[ Yolunury mww acuau, aurA ss vn6v'ng, aod aniooa ivadviog eyc-M~d cuordwtion barome aerioiolY Inpa1~. In su111argcranwnb. decpv nws d Ne bnin art illx+ed. which nvY rtsvk in mNusbn. swpcr, and loss of cvnziwsucss. logesud in 6Be quandtica avcr a bng Pc^~ ^I dme. almbol aan dam8c Nc 4vcr aaA bwr5 aud av, murc vmrcrsibk brw~ damage. PSYOIOtO61GLL DEPlNTENLE Yea PtlYflGU.DEPQNDPNB Y ADVFAfE/OYERDDSEpEAGl1ONS+ 'Bhckouu' (bss of ircmory Of evenu dwine immlated eu¢), mNusioo, inrohere~c. arOm,mimiacaa¢. DoNupenibkductourcrtdeqcasioncfbraivicenurt whch mnwl Martbeuand brcvNing Uacd N combimllan wW wEtt depie.vanu (c.8.. Nc bubiwrnes), 0e rRccu art BrorN in¢Wd and Nc risg of advcrsc rtanbn ewesrcr vcrtmdwAY (aec BatbiNn¢san,bn} P1fECTONDRR'EPS: Even exo dnnb o impair a dnvcls judgcmcnt vrd mNOn drte. geaordi aWwsUu~adrivc wAoromumeabnwtenauvduvcndiinW NatwolnwpeMd nndNcngcuCeNMNeMrslofaarutOPWneaNCV$ Rkafarnnd'mking driver. One haYof lbe SO.M deaN. fmm or accWeau orli y®r in Ne UNUd Suua ue aki+Wl~nbud.
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ewwNww.._.ssuix» p. .,~ ., , . ., ., .,., ., .. ,,. m.. ., .., .. w., .. , twtuams„~.,u a.M.rnp LBEC ES6tS '?a" uv urms cem, s,w~r,uirc,., wa m.,reu s+n
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--t6TLL-I-%:S:JSPtl: RC OfFI[f- 2I5 ia6 09a?:= s,ls Dmg Pd'icy I iM DSA Sotn ioce R. R®ponsibWNo E ~yera As reyu'ued by d,c D~Og~Free 2 wkp6ce An, an cmpby¢s mwl mGfy in wtibo8 his or Irte iwrcdiaa supervis0r and Nc Ma~agcr. Rcgbn Paipb>ee Re6tixs rltlJo S dT uponbcingwnvicicd0lanYC~baldnqoCeuae. FaihvemairywrtbceeresDOn- ubiUtiez wN resvk in di.cip/inary acuin uD lo ard iocbdiae aiMnadon. S.pmisingHmuger Ii b ibe rtapom3iRry d Saks Mzmgereen[ m rtput 4ohpYcc~rtYpd ainuii0m, ss drf td'wthcpotiqsau.ocotwbcn:DOSOZSbnaM/«uzefWcgildrupuaybc aFingpla, WhenaineMxrofSalesMarugemcnrcbeetvesaod~useorpova+unaf Jiegsl dregs, u u hWM1Cr rcapwuibi4ry w: ImrcdulelY Ootfy d~e nexr krd of OdC managemcM up m ard Incladkg thc V s PresMeµ Regloo Sales and dte Lfarugt Regan Empbyee Relalio~u. Takc seps u daumcn, Ihc -nC incbdmg ee~emenu from anY dhcr'vdividvab wfio abrrved Nx shution. Hamge., Reg1 nn Empbye< Rebtlnwa Imrcdarely Wornr the ITCCmr, Fmploycz Relalbns-Sales of any vb6licns ur aiJegcd viobuons d U~is poliry, ConLOn invuligrUOn. of violaGOrs of dus po4cy wub Szlea Marogemcor vW dte Dimbr, Rnployte Relauons- Sakc Df ^au~• Rnpb)'K Relat/ov -SNea A.2quircd by Ue Diue'Free Wwkphce Aa o(1MI emurt duL ]M1e appmprua <onmNng agcnry crsgcnciu 4 iNOrtred xiJdn t0 deys atar iwtiborioo o! an employtt wvkpbce-rela¢d cnntlral d,g mnvktion APWOPruic EvclPllron acYoo is uY<n agai~w sucA empiqa(.) wNIJn 30 d.YS af nwiflation or sucb wwkDlm.ah~ cmJ~ul divR ronvlcuon, or, «qu4c sabfac- tory emoWnent anE paNdyuon in a doae rtbabiliuunn pmgram IrtlrrprefaNOn ojPuRcy Dirtn Rueatiors m iAe Miwg<r. Region Empbyee Rclauon.- ih Mvagn, Rcgnn E p5oyee ReDtioiu wJ1 ceraWr wiN Ne Duecnr. Employee hlalions3ales, as rbe oeed I J ® 51954 0353
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Augs md'Aren ERz<. USE 0T PREGNMT WOMEN: pc<ent audcc show Wt pregwn aomen wlw dMk be~zfW (def ed n dmktrq rmsc dw iWcc ources of ilcobol a dsY. ~ eqWVeleos cf sbrnu nm mked diinks, or iau txh<ouna becrt, or sw O.cwrcc gbcrs otcinq iun c blgbereW ihse odsec warreo af bvieg Mbiez wiN phys'val, mcnul, ssd beh+vionl sbmmnGdes. ,VmIpISYsdmmc' can bc Wc scw§ of Eavzs s4vhol ab:nc duN+R pe8omc5'4 and u Wriacr¢ed by menui rtcrdedon ard pb)sioldefomutie u d:c sbAd. Smrc zndlez baw dertovuamd d,x Ggbmr ddnltin& o~ sn avsumi'butge', an zQea . wbom chlld, bu ft eziderce ts kss dnzcue DRUG Bar6iturates SIBYLTNAME Yelbwu<h<¢,lclloas,rtdv,ludes,downers RF¢R5: MsnY bvbltunvs meY bc k4 bY W~ m inducc,kcp end rtduc<rKS. Rchiwn, akcpircss, alowcd i¢nol Rnd physlal hsrevoninR, snd Impubisercss are wmn cRcct. B~ne thouRbrs, diw,icoction, RM sWsred speech may 9mu wih Eiyher dmez PSY~iOtAGIGLLD@FNOEY~: Tci PXY9ULDFP@JDwCE Yes AUVERSP/ovmuosxRE.rnoNR . Crnfiubrt. decreved response m pvn, zlullow fespintioo snk enJ zapb pube. DK m dcp- of anmi nervmsz s}uem fonnbNn& she amers cnnuoWnR brtxtMng ard hnnbeas in penku6r, mma ud dnsb ert pon0k Mrcn ingwcd in W&e+ W<omGnxGOn aid: elmhnl, mzy muu ¢iz+as»n tJShc dvClvsem b J:e degrte ibz Ne uscr sWraalcs. LL56BYPREG.'IAM WOTffN: bom m bad+duni<Eependcns snlhcrz sc 4- Ne¢ssclves bom physnlly Rablc' dependenL and rcawrt speNxl art ood uvKCne The.zc iNwz aRV pWNW anE dxn3emus auhdncal rysnpto~m aRer biM. PM USA sdesico-c< fim64uraf<ri.,:.w 4 rb,eT nL,u; .-Ltbr I bnMltu.m<jmrdlya~d ,fmm: pR 51954 0357
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51954 0389 s~+z -z/r- -xh -rh 0. Mr zh- .h-ci '~. v t z f o u x u ~ s o tt x wwsaa4wm..xm n»wnuuweuuuw sum~mrravra»uoNre xxnnn rvns/r~wns
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Sf.S1 BY. 11- 1-% : 9:90PN : PLC aFFICE- 810 ;a6 09iS:v16i19 avgs aM Iheil [Hecu PM Of~ fdes iace ,NVFASFIOVfRDOSe RPAC110NS Paru.ou and fMings af persesvllon, nood aMngq parve. Ncukury and ntdiar diswMrc<s. hallucWlons, cunvutsi- .nd wm lure all bem spwled_ svch Nc+vY. frcWCnr dases nnY p~nce bn/n damage rrsJUn81n apm'h dtmu- ssdiRrWryinlnrulaAngrhoughu/nbwnnb. DnlAcenunuadamphenmine mreNose. If lryccted and uud hearpY, mal'u naY b+lld up 1n dK u¢fa bodY. ae~IW In a condi:ion Wwvn as ampbelaminc psyAqsis. Amp.heuMne prycboaif's dIaOaedxd by exlrzne suspiciowrcu. b'vcm, aM - violra beha.im. DRUG: Manjuana A¢TDOD OF CONS[IA6TION: Snnked. or Iep mm:nonly, tngeartd. gTNFETNAME: Dope, pw, g=, snnk, aeN FFFECTS: PedinR of euphora. R]sxauon, aod Eouu of ereggcnrsd IaugAxv mmnly «poncd. ManY fccl Na<Neit heonn8. vuiun, and sl:in ae~itivlry ve enbanaed by Ihc d:ug. Ircrease in han rek, dryness of dte mv:h a:N Nmq md reddeoing of tA< eyes Nten a-nY nranNare uazge. PSYQfOIADIGL DFPFNDFNCE Yes PDY8IGU. DEPFADPNtE No deat evidence ' nnvLgsf/OVmDOSe xe..rnDNg: • Atrhough ra:a. fn4ng of qnk, a:usry, and pannou hrve been rcpcned. Acenlubn8-te~ (6 munUu ot mart) malVnana ufe nuY Rdnce feNiilY in won[n. 5waiea enow Jm rucn usen art rhtee timca nus likety m bw dereNrc tncwwl cnw. emnr:ensd bv faawe w rn„mx w a arortenm penod RfreWW. wouc mk rmrM:mna uters hevc bces kvcls M IWaotrouc flw: nonuaen. 11Pan aapGing dn,g ne k.¢b rcwtn lo nomuL gewrtL abo'udiceles Nrt apmm aoum dimioishes as kvel of nvnp.w use bR<vex In addWOn, mirc drne aprm d mroNr u•ers art dcfmive and norvNnetmnal. ® 51954 0362
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51954 0388 W I U W l.l W I l- - se ac v` n n ss ss ss tt zs e` u u nz x sc /wv ms aw umn smzs sim arence n~n seaa~ asu .a.w asws ros u.n3 c aro rz/z'e wn'asn r:vum/x~x/r
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51954 0391 eh-Nc- W. . W > - '.-Wwvewy v z x z s f v u>s u e s o >~ e ananWiontsm zwn xw wm».nwz sen wca.u mn wz~cze sems w snwa. a/x'e csxmo.sv nsa xw ~oensn nooh~rsnw
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W / W W Wr / rl l h W y- h sl -ah- h- h - t. awMwmw x u ~ is ot u cs ~ x s~ ts w M upe s~ ce a ue e s 1 s 9 u t u a>t f wa> vc w x a a n s aa x x a w+s a w au ssas mc .au 3snns vnn am annx mn vanss vrm ro.wvx rz/Ye xm..o. wwexehmmM 51959 0390
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lr- t-% : S:iePN : PLC OFFIff- 21'o Si6 09C2:x19r19 SMUSA SO1mFmce~ ~-~l Cr.g.wdtleuSNxts DRUG Narcot(cs I 9 I MFIHOD DPCANSUSPSION: YyeNOn, IrJobYOn, inKRlon EPPCCLS: Nvm~ksreduttphYSicalpinudau¢dmwiness. Euphed.,relanWn,apuAY, diRcWry w wmeiwang, sbvxd spxd:, deueaad pnY+~l x4viry. dnntivt. LLching, srM rausca lavc alt hcn n:ported. ' Moryh've. a nrv pnwsdul p.in svppmsam and skep iMiar, u/ePM anJablc, v e a~Le'uc, an'v,grtdieel N mnY qnviWnn F•M vd msFA wpCs.~nnu. McWdonci.asymAeucmimYCwdNtheucasnenrdhcmindcpeMcar<. Ss reduces she mving (a hemN eM p2senu sAe mrses of eiUdnvnl ryry+mea, wiNOw prad:win8~he•hieh'rAataceompsiJesbewinwe. UkminwiDMwafbee'vu.riJUn fwr~askbursaf¢reAewAidepeNeniperonslvslrycction. shakwg,sweaWg 'tin& eNll., abdmJml Wws, arA durtha, aLL ryyiol w,didnwl sympwms, eFFev wiNin Ibt6hcws) MMadnne alxi uuscs pAysr.l deperdence. llowcrcr, in wmem «ruers, it m be es(u0Y «Ndxd aM adMKxemt. ManY ununen cemen pnvide far mxhadooe wiAdrew.l, once hndo depcrdeMe hv bsn wr<ud~d~dlY rrta¢d M'~IOLOGIGtLDEPFNDFNCE Yea PIIY5IGLL DEPFHDOV~: Yea ADVFR4F/OYFBDOSe RFAC110N5: DeGrtssed krc4 dcovcbusnrs, bw bbod pn:vure, npW Ir.n n~e, Aullew Diaih~ ing, mm~Ydom, r.aria, and dnUh ve pmsibk. ' Physksldangendepcrdontheepetlf dmguWdosageksei,lvx»¢c,andibe.nYk uxd. UndeNcxedks,ryimgeyvdahmpanphemxGaanauseenynf-5nl disuses (c g, sewn hepati(u h mmrrnN 'Ow gfe eapecun<Y af dis IM.es<nass hwin u<r is s18nJnnsy slarttt Wn tlos af one vho'snons' m Wgess Ne dni5. Acuul henin wmcwntlon an r+ry wWelY fmm D~A>K w puerbve. U de amiwt of haem is much hlgfsr 16an the user 4 accu~wmed m, Ne asNrse an rtsule in da0i. Cunnmimtion smmbimnaunfhemNwBhotlscrsuMUacuordrugsmbc k[tul when injcnW'vunttno:uFy.
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SLIi BY: 11- 1-s6 : 5 n,q:pde~, ik.+, ADVFASF/OyPADOSEdPACiiDNS Pannoia aM feelinga of pcnccauwi nood awinge, panic, dmrlabey and eNiac disBibarcez hauucwtioiu, conwlsbu, aM mm have au bern ieponcd. fk+w, frsVSCer dmes my poduc bnin damge rc.alYng N apeah disouWKee. uh udiRuvlryintn'ulaWgNOUghutnuwcW. Dnihanomswithamphenmine ove dosc. tt inje<ted aM uad hnrJV, bniu ray bwid up ~n rhe meR body. rc.hing in a coodikon kiwvm as vnph<emine prycMsu. AmpFeum:rc pryetmis u ehwpeA.ed by cnrtnp suvplciousrcss. hivrrt, aM m~retimes vmlW bWMOt. DRUG: Marijuana MEDIOD OP ODNSUMYfiON: gemked, w leu mrruron/y. ingenedd bTxE£y NAME: Dopc. pok Srsss, mnkc• axed CffF4T5: pcelings d eophoria, rcluation, arA bovu of enggeraed /aughur art mmmoNy rcported. Manr fccl rhu deir heaM& viuon, anE slun xrtuuviry arc enhanoA hy ihe dmg. Increase in han reic, dryness d tlx mouN aid Ihmah and reddeoing of the eyu Men attompvny m.nNaru oagc. PSYCNOLOGIC.LL DFPEVUFNCE Yea P8Y5(CALDEPi.YDPvV(.E Nodarevdence .fDVflctvovmGOSC Mz.C11ONS: - AlOOUgh ntt. (e<Gng of pank, u¢kry, and panoeu hm been rzpwled. kcgWV, bngutm (6 munllu or morc) maf uana ute m+Y rtduce feni0ly in xomen. Svdies shoa. WI aach users arc Uuce times rm2 ~ly u have defeahe newuval rycW, clunc¢nud bY fatlwc ra o.ukx ora sbrtcr.v.d perod d kNlay. Cbmoic rtek uxes tuvc bvcr kve6 d rcarooemoe Pan nenuurs. Upon swpping drvg akrcbceWmsnnumol. gex~¢haise4idiatadatyxrmcwm dlolwsbu u kvel d mady,ma use incm~es. (n addtrien. mme d d,e spe~m d chronic uurs arc dcfntive and non-NncsienaL fM YfGldeslpce 51954 0361
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51954 0392 h l h W h l / h W. M+- h zh- h- h-W- 'ss ~^+~'~W^^°~~"°d"t ~ st s t s t tt t ez c~ s a w esa mwnzz r wmM~wer
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u- 1-ss : s-aii•x : n.c orelce- zrs - osaa:= -s L- nNg sdiy VbbXan ofCmpcry Rrba ®hcnevcr d,ert b mwmbk ouse ro xLr.+c dur an empbrce haz vbbkE Ne Campeny'a policr Ga chanttenxd, for imua<e, b1 ~emn~ or emUC beluvlam ~hc pb), Nu empby<e will I=wi+/- imnedhk awapemion, wIW Par• PervivW~g a cwwny mrs;®na,. Xe . la ~M1e car2 d a['ompanr w.<WVtion, emplweca uafeG<d W'rbhWy 1hu b puhrymybe~ryiurtdbaubnurm.FlbessformokenmiruUOn,wbirArtey btloYacrteun¢drv6ks(a7. GrybyecawJlbeadv'vcd.dul suchzsumay Se adminiae¢d. V uK rtyhe W rhe tra(s) mN a posiuve drvg fuding, wcL resilu w01 be b Wc civp4ryu•a gupervWng 6Umger a nd drc Dveaa, fm picreemmwov.d getmna. saMs. mhue.~ emWq<e m,Y dagne n te reekd, weh a Qecliruuon cmtimka gmwds far dociplimry xtien vp b and incbding V. Yk, d,c inu<viDtion u mmpkkd, N. empkryee b fowA na ro }ave viobsd ~Au poky, ~F•c empbyee rJl be reowM b woh. II, afkt invea6puon, rhe CompanY dckmtines Nx Ihe en,byee has vbl.red V~is pa~ry, mrtcnivc aaion wtl be takco ugavst Uk dfcnding cmpbyee, wluch wpl involre dixip4vry aNOn up b and induding kmicauon. Tne wwae o' x4on b be uYen wlll be dekmdned'pmlty by Sika!namgemeM.M Ne Mumn gewusca ~ Sxlu departnent Nore: V an emyibyee u duBed wW a wakpla¢~re6kd vurvnil otkme due ~o pua.evion uW/erue of oaoud.kd autskMrs. thc indhvdua/ wiU he pGced on a Spxd AududrN fnve of Abaeoce. Reima¢mcM-wyl bc ron'dertd b d o arwr~e~dfxmn,IrcLdingrkeomiwnyabbmilin.<av®nonamu,e ~mne ot ihe kp7 pmr.ed'viga, iLia c m aaadancc widt phWp Moln+- te4ry mM<ming rtaaoM for Spccul AuOoNN Inve d Ab>erc<, Addiwnilly. an cmpbyee imoWed in an ac.idcM whJe openUng v Comqny vehide wl/1 be requtred b wdeg. a dmg a~<cn, in acmAaec< wqh Ne pm:edwec ry+ttifed in Wc Vebick Sxfcry PoI1p'. ~
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51954 0394 N h w1./ Y h h h ah u Lr a/ x'. ah- ~"° 0 0 0 0 0 o e o 0 0 0 0 0 0 0 0 0 o a o 0 0 0 0 0 0 0 0 0 0 0 ~ •+rrnn '>mhlw
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51954 0393 r r r w. r w r r vn n n n r - :~- v ~c x v v v o~ .~ x s~ m e z .z msxw.mz.w aw v. x x s s . u e v v x x x ns 11 ws ue~ r.w..re„ wwnae•..~wmnrm.
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5:954 0395 wrN.w h l I Wv h / h h xh sh y h/°""j. ' a z z . c s c. u.. t o e a. a aeeseJion..w. o n o 0 o e o 0 o a o n o 0 o e n 0 o a o 0 0 0 o a o 0 0 0 0 0 0 0 xvm.a ..wimh.eiuc
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sE\iBtI1- 1-96 : 5:21PM : PLC OfFICE- 215 5;8 oei2a1] PM US4 fokvfwce C/.rm .... ~_ I pn, ~ ~w h ... ... : _... S- ad drrSNua FtFECfbONDERTJlS: ' (,`( Acual drr+ing caPCwrcms mol eAa~ Ju dm8 has a algoilhn inµan cn ~decircnt n. and mn¢Nplion. aher ewdir. iMivlc tlut mdpnm cRecla pen:epoal md ,mro. akiu<. abJiac.,ved ah<n oa.dcs a mnnr vehw<, sr ueu. U52HYPREGNAnTVO!@F. nun.d's4miWbmcaafpmtlbkcwamax,u~bOm<bJa, xo.ercf,mad~.na cmu We phunnl buder and Utw on recb ihc fnus. Some xicntim be0ne Jui winRcMNaiudurintpRZaanrymrybveawic6- onembrywaMfnuu. Almw all Phraitlaro and prychobgial a8mc tlnt u.wg muiNam duMB pm8~cy B an unncsssN' ~Irk, DRUG: Kallucinogens (also knoum aspsycbedeltcs) ttreas: Th<x dnay aR uqbic of ppWucbig dungc in I'e~ptlun. VividviswlandttqsnryLa4LcWUnn.artrcpcvlM. Uxenlcponfudvuon>Mb orGnarv cbjccu. and hel8~nc-0vNdic respmuc+m mbr. u+nus. syaliai smngemenu, aM mu.r. 5lonin8 d lime and ingnNed (ee4figa d brve, lnrc. pr. pain. ¢mc, dnPa/r, c¢. art also mmmn raramla. euPhona, and fceliny of padc art rcpckd aa wxil. Sone Individuals ehim Aeybmeed cmativiry acmmp.Ncs usc af Ihe dm8. bul seoRh r,~b e apron w, a>Knlo~. PSYGiIOLOGIGLDFYQ.90YC8 OiJY fwa Mroruy of um rursIULDUMFr1@ Nc ADVFRS JOVPxDDSERPArnoNS - Sonc'vutird~ds repon bemR xrN d br IF~c aar ae. ecpeciilir V ILe u+tt ha npnienad emdiniw dank~ ]n w[ paA. nSUCa ard clJlt.. inc-A pWae. ¢mpenove. and bbod prtanue, aM ae/rbl"uy art pnuible 4aa o(aPpe+~e and 4uonNa art mmwnlY repw¢d. Soire ir.4v'wlwb undecNe Wluence N L50 have dlfplared bvane and danFnle bebvior whkh haa kd ro Ltlwr el dmlb ®
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,.,n.a.«.««. -«. - ,., «„ .., . .., a a; ,., ,.. ,.. ... ... , ,.. . ,. .., .., a. . ,. ,..,..,. ..,,,.....>.t,.. . ... . .. . 96E0 456I5 ~"G°""jF°°'Oe..ra,rruxtt.e,mrasuan.c«+
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5.954 0401 sn~ ?(._(__W h W l W+ h h Wr-N -Nv- /-/- h~W~xw w°rx%wi~mi xvmxx •.•rcm/x~w
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II- 1-96 : 6'.92PM : PLC OFPICE- 213 6!6 0912'.e 5r19 tM VSS Soles Suce ~_ C~ldry L DgvgAbusePoUcy-Aev3scdAugut1992 II is ~he esublished policY of PIu4p Mon's I).RnA m pmvidc n mfe, drvgdrt v.oM1ing Zfor iu eRpbyees. ln addiuoR Ne Cnmpanvi cempllu.nln all pmviaors of DrvgFree WM[p1aR M o119R9 .w rmployees ve eapccted m Lr pre¢m x woh as tthcduled: w bc In eviuble n.nal. vmiorut aM PbY+bal mMiUOn when x wak m peRomr d+eU jnm sousfs-nly; aod wbcleve.ppmP^nlely. WhenNcuseaJrvg.4uerkrtswunsucneapearaommiv any oNee »Y Ws an adreca eR<a on Ne CnmpanY. empWyzea tnve Ne oppoiwdry n appmprh¢ asswluc on a cfulmtial naw tleough Jx Company-sponwicd Empioyee Assisuxc Pmgrem m a pmgrun apP~ M'1ie fu'nYM+B:netiu Depanrtent PniWre of empbyecc m mcn Ne bask cxpx.utirnu dnnibcd abeve end/ol w av111 Scrosrl.'es d Ne pmltrrcA u.~tvantt prwr lo •bhung Ne Gom(anv Dm8 Muc' pNid' willre-.iJrlndisripUarvnaanupm.ndvuludingrc n. inoNerwarts, px/dcipaeo in Ne Fmpluyee Auisuns Prugnm rx amAc~pProvcd rtMbiliution Prognm u mr a sbrcid apirsl dumpRne, r,rh N/dapalion does mt+uprnede de ConWany DrvR ~ pPkCy nr nnY dixipl6rc for viWauon c( ils pravisions. Covered'H Nh polky u Ne ure u' nll f- of rurmtie., dcpeemnu. sUnoiWU, and ha4ln-geru, incAldin6 ~mnluam ard cmine. or umuUw~V<d prercnp Tnc sak, purcbnre, vav(er, uu, or poascsrioo o( 6kga1 d- on drugs on Comfsny popnry irxlvdNg vehklea, c¢., will rew4 N dissiPlwry xtion, uploaMiraWdn6~mYVaion. Tneuseotdnig.,otrxUun[apresvibNmc~4a1 iu, dunng wwlqng hwuao~ wnde int rcpinenuuaul cvpeclry for Ne fumpaoYM wheNee on or df Comqq papnry or Luide or mm:ie nf vebck , u pmNbittd. In geixnL WedinllY-Prvxdbcd drvg+u'ed In caNonnrae wIN appmpdax asdial xe uunpr (mm Na pollry. Fbasver, Ne Cumlwry aservev Ne ngh u ewhe¢ +uch+iu+.GOiu.M u Je~ermhu aheNer kgnl drvgs nkrp under mNiml wpervisioo pnpan an IodiviJpui's abJlry ro perfonn all+epeas of Ne empbyees pE atia6euny and saky Employca nre enoungcd m WvLe Ne4 upcM+on •'hrnevcr Ney vc uPJng dngs for mediol rc.wro Jur wy nllca Jcu beMvior u Pb peRxmarce. `Ahmr.er use d p~ucribcd drvPi hss an advene mxuan MJeh rcgntivcty aRecu /ob pcdonmue erNor afcn, rM empbytt shauld le re4eved of his w hcr duurs for Ne duauon of Ne imq bn~M ®
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5195q 0398 a[ u s[ itw t ~ t u 9[ w w 11 xa[ aau xnrs sxsnn [3uaa aw w e3.n twws ssrn[e ~wr e3sm ewi ~ew >[a ntn us[is[ [[ms p iweev r[/c'e rsw _ww [ose ms[ t .wmm[ wwnn r"~mMtsr
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li- t-96 '. 3:i3PL : fl.C UFFI- FM Y!A ia@s iace Unps und Awt Ifkns pmEUttd by cdtcr foms cf moiue), hypcnMiry, unpredicnb0q. fdknxE Mihin W nwrs by fec4ngs If deprtaion. phkb ®y bc 4wrc pproimcM. A m&'higb' 4es bccsan 5 uC 14 miwc. flRECiS: XncMS ihe bnln in ks ihan ¢n xaavndr. Eupirorb (mukediy gmrn d,an Uur p5YQ101DG1Ui.DeQIDYNGt Yu. vhich vay be esvemely pmnuwad vd my develop antM1in mo xccks cf wNg ih. diug. P9YflG1.DtPHA6VQ: Nadeuevidrn[c ADYRSPJOtRBD058 aFdLTONk Inlenfely addiYive. Aln. acck Is de¢p4ut19 WoidrHe. u 11 N pplra0y pN In giU.dD nDQororsmckpAkO. Ndependenrypmgrefrsvnduagcinaass.Uc mu cf dk tubir munc gwircuio9y. USE HY PMEG!l.NT WU!ffiI: S.dles turc dacwrcn~cd Nnh def<cu In inbnn nc.rc moJicrs vud cnck dwing pre8-cy DRUG Ampbetamines STPUTN.l1~ speed,vppers marn FarWBdmnfdenc£aodalenxa. Nacdekntlen,inneauNepeechudF'rcN pbY+bl attrviry, dmoaM fPpeu¢. vukry, 4nuW¢y, fmcmnlg. ibcR arc a tew medid uvs of gmphcamircs, inciuding mnwl4ng appeee cn a rM1On- rm buu, votine ~drtn with iriniml bnin dgnvge, aM kca'u~g nan:okpp, g art di»rder cLxnc¢rirM by iwrcd'u¢ ud unrommOgbk neM fw deep riYafOIAGIGLDFPENDFNC4 Ony fw hnry uen FRYSIGID6PF+IDFNQ No cku erldeace. physcbgkzl deprestlon my umu upan wirAdnml .
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51954 0403
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4-d ,.. . ... ... ,.. ,.~ ... ... ... ... ... ..< ,.> ,., ,., G6£0 bSSIS
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51954 pgps a.-.n-a. .-r. w .n . o. . 14 «
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51954 0407 N / / h l V. W h- /- h- h- h- l- h- l~Nrrv ~n mttnr..a..~m:^~l.w.+m'. x~.mn 'aan/x.w
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Tabulations - Additional Banner -
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51959 0409 +h oh xh W-+ 3h N rWr~ ~r~w x~ru'» snuvmh~~wn
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51954 0399 h .l Mv W / . ry .W•J - l . 1 - .W- ~r/e+esseua Cu wf sn acs =ss sa+ zn vu (su Ssa+ `sa+ La+au sen esx un~rc ~~~~a~ vt as tt as f ss a v v s ~ t a ns ~ua ms s.ous nw ssm>a sssvrn u>ISO.xr w nm swu zsrsua sv.r nm vns wa asv nsn umw s.ms u axrnsz s/s~a „su .~ xmss. mswm/nam
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5?954 0404 i s t o t a e x t . o o sioea e'/.on r.wo s ,, u rtt a's a es u s as a .r~s mi w ror m <«r ar ao <n <n <n rm m r» rm m so m .am mn. nv.v.. w wr :r erwuu+..m wna nhe «.rxsa r wn/nviw
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zy.arw>~nw~s.~asev,~u,ss».va 5?959 0900 .- -w,wi-
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wa..xeo..m zse .. z.v+s..asn s.m. svuu. €...vn 51954 0406 M1x....M.q.n r L z L'+ v z s f o a f . R s i4 f t z t x)ni6i1 r..am/naim
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51954 0411 e/r ./. Wr W Wr . Wr . yr Wa'w~s s~r.e.`iw~e ~ rms rnv rmx.r a~s o. s~ .~ws>vn3 v~i Nrnm vs/s'e wvnn wmhrsn.
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51954 0415 xwnsn .wmh,-
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51954 0414 z n nwa3- auAm t.wa 1-1
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51954 Ogl6 xvma w-Mxim
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51954 0418 x~wisr ~iwm/nmr
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51959 0408 v z s , x s s o v o: zoe..,. owz~ c.m , o s a c u o c x x c . v u ~ s o x o s o , z o . v ww 0 0 0 0 0 o a o 0 0 0 o a 0 o 0 0 w.es3. ~vamM.m.
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5195C 0910 h h W-W W- h.l h - /-W-W- M1- h-W M - h h++w+ -al - mh~.u i ""++m++ wwn:w+M«o~.cw.. + ° z t + t z o a x aw.h <Wam a.we f > [ i ; z~ v s o a o x « c + f m c + ° t s + x x [ u [t + + + [ + + a u s a. x o n° a°L u-v s[. u u° ut° + a sr o xw u[~s xm ..nu. «a w. si .«...x.n vn wns slse wwxn «~wimMrd..
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5 54 0420
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51954 041, , a swsa Wiuu s.wo xmnsn nm/nmr
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~'{ 51954 0412 , I' >vai n+us.w zss sr srmsnwss >sma wusn an. ~( N N h h h h h yv l s o 0 0 : o 0 0 t~ ~wl.ow.~w> W n> n K l9 w u w>it [i u wt [n uf> >utvm>ams.vbi wwnv imMrar
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51954 042
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51954 0419 - . -k.w
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51954 042 soea Wmina ~mrrarn snnoehi~
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= == z .=:s= =. = = ,. 51954 0421 a.wns awna Wmp i..oe ~'e ~orrisv snam/nw
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51954 0424 xvnnvsnwreM~wuo
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51954 0425 wwsa wmhmw.
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51954 042, .m ... am.n uam on. maaa »u waa .~. e am .xv.a w iro Nze vo~e ~ t .nnvn. xanvn '+v4xnws
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5:955 0427 ms aw ssm~n a~sm mi onw mn .wti3e ar. s~am sums m~ wv.3 n~m v~/z'e ,w'vi[3~ r.vm/mmr
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51954 0430 7.7 x~msn mrvemMtrar
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51959 0429 mn .vu 3mna rrvxt am emtnx n~n 3n>tw ssma n sxtws. rzfz'e xwmzr w~wm/xpsnm
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51954 0431 u aenaWmnaw wrvua .nnmM-
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8140 656ic wR+uauna.ewrt=wwu.,axw.,eau,.rr.
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51954 04 xwvnv. mmomwr
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51954 0433 tm~ t.rmee3~ wrvxn mm/i
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si95a 043s
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51954 0439 xxves> a MwsM~mw
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, g q 0435 a 3uosa W~un t.'oo 3~as n>ni um~a uani xwo +xv m mnx. arwu nrn~a iuvm vum~ sni wv> >~a n~n vun3e xmn rsvx svms mt ..vv n~m rc/['e x.wn~n wimim/wiwa
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51954 043"/ ms .vu 3sms ss.nn vw.o nw w.3rm .c.u 3wxso .wa~ wrv. am wu 3~a mn v.3nn s.ms w.~ea3. rt/ce *'w .~» sve ws. <.wn3. xanisn r.•n.m/www
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51954 0441 x.wmv mvm/xtw~ue
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51954 G9J& xt n xosaaVma..o 4wrfsv' .tmMrniea
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e..M ws o twn .m voss. w.es. n.r eEUErs r~u^ese~s mv.u .~wsssaia.wss. swos .wcs. a xn o.w. s.uns x<ws. ... uvs 6E6o bS6L5
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51954 0440 [t • t u woss~a/xm..ioa xmm~ ynmm/qmm
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51954 pgq xwmr enwmM~w
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51954 0443 ums ~.n. aaxw m w. xt .~wuun ae~. us.m w/t'e »mMUVrs
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51954 0445 wnsss rsw.w/nnm
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51954 0446 ~ • • xesv aJ.m a.um tm~ ~ .wr+e~ iuwas» r ..*~w/.~x~
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954 On ems siw.~ 3r.r.r mu w~ i~ .vni..3n3 3ni .nt~w n/.'e xvm3. snw~m/xixtir
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51954 04gq xvm~iv ~rnem/qani
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Tabulations - Demographics -
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51954 045 u o 0 ansi u+/me t.wt wmsa ~~amhlnir
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5,954 0453
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51954 0452 'umsv amMwr
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51959 0448 re aiosa ails~ s..m vsmm 3.w mrvur w mr n.wusas sni wsr. rtls'e
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5'_954 0455 xwmn -wimh-
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>1955 oasa
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5:954 0456 xvns3x~~wve/xnsnr
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5_954 0458 m~sn ~.wim/xims
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51954 0457 x z a mosaWxxut.xa 2.1 xwrax •ws/xnsixa
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51954 0449 rrm am mrr.r ~u ws n.rws~3ns se~s 3un: rsls'a .ms e.vmws x.wmsrrsrowhnvw
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51954 0459 wms m+a.m/nrnx
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51954 0460 x~.mn '+~m/xiaxa
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51954 04u5
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5i954 0463
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51954 0461 11 xarvssn ~wam/xisspc
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siss4 aasa xWVnn ~+xmosixivuw
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51954 0466
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ag I _.~ .~~ as o0 00 li~~ 69 ib 0~ y 00 .. -. :0 ,.- .. 03 K8 p. '~e~ ~Y~ ;yF ~ ~ ~A~ 9~~ ~S
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51954 0467
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51954 0468
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51954 04]Z 7.7 - amM.-
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51954 0410 x.urm. a~w~mMrvnue
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51955 04"]1 w ut ttt [wt wta wuot~xn xwnn. rspm/xntrtw
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51954 0413
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5.954 047'/ x~rvnn anucmM~auiw
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51954 OS]4 wnMainw
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5:954 0475 xvrai. a~+aref.nen.
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117 9L60 csscs
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51959 008 xwm> ^~~wtmh~~m
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51954 5486 - aiwmMar
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1.7 17, IiM.M ~~2 t.o 0.2 656 iS 10i2" ~ tit~° °OD1i stewswci .r ws maecn um 600
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51954 0981 nn alwt'a Kvntn 'o~m/.nttue
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51954 0483
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51954 0482 wrvu vn~am/.~cnr
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0
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-- ._:_...,.. i:=;i
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THE JOURNAL OF BUSINESS of rhe UmA~+Oty of Chic bo VULUMC VI 1933 I i~ll_~ - <Illtn~.n i•ul;ss , 'i~~lnfr~s(~~LL~Nrs~s q 50 556-,5
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51954 C493 ~~..r. w .
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954 0992 .~...~. ~~...~.... ~
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51955 050i / al4nv e livm.rc.. - vaJay ay a,ayJt~lJryMy» ~ v'Lllsv ua~oe~ .Y4 I -.In 1 v.1.u.Illv.llJ 8U9nlAMUJ clvVlv:vU'i1u. lya.~utyA vJwsu> nuai IW a41a~nla.nsllual>~yna~wxl IewnyvV auU9R yl.avb^ V ww~w- wite'luay lnl9 SSJxrsnu io ivNnnOf:ix+ ~'
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S 51954 0511 PNVSwvaUwewWP'"PaWaaemmWiam~e'p~n e we4a ai anY ~V Few Yw~eWo w.nles a41. -.~ ~~ iuerl u .awa ea^Waw'FI~'~IINexlwx~eMaryea:nuea..+arvwp ~x,ro1e.r~ .x aY.v t+~ ~ s j 1 rl IeY*w~Pl^PYS 1 II ~ ~1 V wry .. ~.~~ a IIwnIF~a~ a9 ~P
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,tNATIONALECONOMIC P:ESEAftCH ASSOCIATES Privileged and Cunfdential Prepered et Request uf Counsel To: Kip Viscusi (cc: Jeff Weil) From: Bernard Reddy and Nick Nichols Re: Pricc Elasticities of Demand fos Cigarenes Dme: September Ig, 199"/ We have reviewed a large number of studies that estimate the price elasticiy ofdemand for cigarenes. including all of the smdies in your book that we could 1ocate and thal had ewma sofpnceelasticities.plusedditionalaniclesthatweidentifiedthroughliterature seasches.' This memo has three sections: I. Sccnon I summar~zes the results 2. Sectionlldiscussesissuesinassessingthereliabilityofthestudies a. Secnon III presents the results In more d-il ' 1. SUMMARY Empincel stodies of the price elasticiy of cigarene demand typically have taken one of tluee major approaches: I. Using aggsegete time~series deta for national consumption of cigarcnes, relam cigarene umptio to prices and other factors that are potemialiy imponani In determining consumption. 2. Using dau across Volitical uniss (e g., U.S. states), rtlate cigafette consumption across these reglons to prices and other famors Ihat me potentially imponant in detennining en(19a0)antlTennant(1950)beraaseiheyanlyincfudeJincumeelaztie4ks.SUlllvan (~ns5)aaenmhavepOrkeelanici~iesei~Fer.w yolSaone(~9sa).NOie~Aa~Mo Mdin m<r(1911)an of199arfnduEepriceelazucmee,buitlono~
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Provu.eceoanoCO.r'to[nn..e 21- Paeeans'.n.rRepuesroeCOVns[e boalegging. As some of these authors have polnred out, this may te a reawnable result for seenagers and passibiy college rtudems. whose abiliry to trevel to ncerpy towas to buy clgarettes ar low prices may be limited. In other caus, the elasticity esumates wiN the res'ncsed samples were subsizntially Iarger dun those wirh the fuil samples. For example, Lewi' tt aad Cusie (1982) reported elasticity es mstes (for adults) wi!h their resrriaed sample that were ruegNy double those whh their fuil sample (e.g, .0.264 versus -0.135 for panicipatlon, aad-0.103 versus-0.03] for use). ' Chsloupka and Grossmaa (1996) found in Iheir study ofreens ia grades 8 through 12 that restnming the sxmple substamially incressed Neir estimated pcice elasticities. The somewhat mixed results from conunlling [or bootlegging in itudies based oa surveys suggesu that ....... tive eppsoech is desirable: if possible, convo1 for bootlegging; if not, then recogaize that the estimmed priee elasticities may (but also may not) substamially urMerstate the we price elasticities.
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6090 b56i5 - m- e°~;~ s,~1Ac fgur¢ rrnrexni f iry cl iwrlY ~I~.~~.i°°~s~iii M Mia serks rNC~ lo4icely sM~iioi i.n e wcLR°re~ n°nr~ .~au~ ~r ~~.
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Pwvlt,[ctn Avo ConEmcSTUt PREPAHEUATREQUESTOECOI'NSEL resemble those for orher widely-defined produ<ts (az shown in our memo on Houthakker and TayloE elasuciry esumates)- ' II. ASSESSING RELIABILITY OF CIGARETTE DEMAND STUUIES AII econametric and staristical rtodies hazed on market or survey d- are necessarily flawedd the data frequently fail shon of the th-ical ideal, and the analyst cannor know precisely which factors are Imponant determinants of the behavior in question. Some studies can nonztheless be considered superior to orhers, due to bener meihodulogies. Thescecifiecriheriausedinjudgingtheex whichcigareegudiesc an be considered most reliable wiil depend un the specific epproach used.lo gerrerai. the followiag factor nre important: • Consist ncy with imponant features of the eigarene market • Consistencywithspecifc,preferablyexplich,underlyingeconomictheory. • Useofaccuratedara. • Correctdefinitionofvariablesbasedonrhedma. • Spttifica of relati nships among the variables thst are consistem with the theory, the data, and the features uf the cigarene markn. • Use of suitable econometnc or other techniques for esnmer~on. In geneal, failure in one or more nf rhese areas can cast senous doubt on Ne validity of the conciusmns reached in e study, although not ail such failures are fatel. Some studies may be considered reazonably reliable for some purposes but rwt others. Fnr example, faulty methodologies msy tum out tu bia.s some estimated effects (e g., the ex~enr to which advenising a(fect cigarette consumption) differendy then rhey do mhers (e.g., the effect io which cigareue pncessaffectcigaretteaonsumption).
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5.954 0513 ' 'v a41N~i .a . .~ q~4 111___ i ww qsw ry> w~ .qw. ls~~. r+rvw>.+. a.p» unpwl~a4tt48aw~V 1lnaqel48~9 u pue sni+»s upan~m) saeex -a ! uwW ,~woa G J^IIi.~.aY~ uaa I 4 1• +ryIW suni'wJ m>.ip1 oa/zuw~a aa.wYl~~k
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51554 0506 maP iw ~. I n . n eo e~eibv*eu Iv.W.u n I B~~IN1a.pe48o`yl ~+w ~ ~~eWt' w~su nt iyy9nv auaYryl4awe»~ooguNn ay,lo4uw ewnsuoa M PP^M ~4a u. ~ta,,ev.a~uW o~.Bae~ s~o, u.o., 4sQO•d ~rv a a.u,~.P. o, ~w ~aw>way~.~u, nue ~ea,~PN~ w~~ :wm la,r e sw~ ~i e os ~ o ePi w o~Ma~, ,ikn~ p ~^H' / ~' 4 W^I8a4~a PIo4e~IN oiQsseyeyse w el t e , ~ ssav~sml i-- voc+w. 4
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51954 0514 1 .. ••u• ~ .I N 1 - ,e~)o 1, .1p`->I Altuau aun, 5 ww ~+ utsyt ry n18m .uY ~ yp ~>..>~ tuxaw st~ ta wewv 11~+ a>uJ >ie.'I~^im >v~ <ae 1~tJw^•"^aat~Jea+aJav~asow.4uam11 ^+ .v uoill 41 ..IP >^s>uw 1 41,1 e V )u~a19~ en P"y
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Pmvt~ccgu nno Conri ngnn.<t, -13- PttEV.arzEO~iR[pu[siofCOUns[t. mcreases analyzed to 1- in sleles with linle or no bootlegging. This eontrols for the fact Ibat s tes that "import" bootlegged cigarenes can csperience decreescs in sales due to itrcreased boodegging when prices rise in these states. They also controlied foe both problems, using only price increasez in s,sles wilh little or no bootlegging nnd using for cumparison only those states wirh linle or no boodegging. They found thal comrolling for both problems seems to maner. For their full sample peried, their median price elazticily ofdemande (over approximately one , ear) is about-0.2 with both rypes of controls (Table 3). When the comparison group uf slstes . mcluded only the bootlegging-free stntes, their median elasticity esumetes w re generally lower than xTen the comparisnn group included stetes that have bootlegging prublems. The median elas ciy estimates wcrc lower for tex changes in the boodegging-free states than in the bootlegging-affected states, regardless ofthe comparson group The last three rows of the table suggest thet hootlegging problems have declined over time. Table 3. Summary of Median Qnesi-Experimentel Elastieity Estlmates by 8eltegl end Gcel Becker, Grossman, and Murphy used a data sn similar in many ways to those used by Hshagi and his colleagues: sales by state by year for several decadcs. Their model, however, difYered substamiaily. Firzt, they controlled thoroughly for both impons and expons of boudegged cigarenes, both shon distance (involving neighboring -tes) and long distance (involving the possibiliry of large-scalc smuggling from Kenmcky, North Carulina and ° 6al~agi and Gcel cakulmed a upva~e pnce<lesnciy fw every pntt eM1ange, baud on some comparison group, ~iciry enima¢s. The mMian esiimnes arc kss unsi~ive ro ena8aneg ntlGOee (ornm~n , 6 can~tl~Rerences.however, yavrcar ~ohav< o paz<dmeansreth<rihenmetlianxne
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Parva[c[o.Nn ConrrncnnaL -19PrziPUtc-RCpu[sroFCOUns[r. elimrnare survey eespoeMents who Could po~entially pmehase cigarenes in nemby locations et prittslowerthantheonesprevailingxheretheylive.l' . Table 5. Estimstes of Psetieipetioa and Use Elaeticitiea Klir wn Prln I NOra - (C~F~La~ an Nleri995 ~ ~ns e I 1 _ ~ " mel ~ oll g<ervden t A.5 - or remale college itu ' ..LewrtanCCwre198z tluiiv(3 oi3Y-/ r -0.IS -0.IS e~iluo e 35 -0,26 -036 a i o cu s<I .1 years) 1996 anLGmvs ae 0.6UroA.93 SroA. rM1V(&b, , 13tbgratle d~mn) s and Farzelly 199~ oungadules. ag<s IB-26 S ' =- 499 oL fo~aZa lu.e8 sample(agez18+LOL519t9 ple(agez g+),O 5198) y 9 0,156 0.085 poolM 1 I9-198] 0353 i991 e1B ~ Rusw1989 Tabnmodel m e 199s a 1 otlel; prin ac'Hynthem oe~I e eluaciry er 3 A35 qkeelasrieiryeteM1eendo periM 9 o el:prinelaniciryetentlo suieiry n Ne mean; og' inear 1 pznrcipenonelnticiryrten o pen ; og- Results for aduhs are Icss mlxcd. with more studies obtaining highet panicipation Nun use elasllcities. Lewit aod Cuate (1982) repon a pankipation elastlciry 0f-0.]4 for aduhs aged 20-25, with a use elasiicity of-0-15; for adults over the age of 35, their eslimates were-0.15 for both panicipaiion and use. For all adults, they estimatz a panicipetlon elastioity of-0.26, CM1 p andGrovvmanrnee ybyGroumm.Cpu<.ISwM1andSAakdkoN reponedlyeb (eoneinued...)
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51954 0515 !v~ roiv
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r 6LS0 5S6i5 THE MANCHESTER SCHOOL OF ECONOMIC AND SOCIAL STUDIES
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Pnsvi~PCen wnrr Consmgnrta. -IS- PaEesrttn~rREQUESiofCOUnsE~ 2. They can be used to estimate sepam~e elasticities for different groups (e.g.. young v. old, mcn v. wamen). Another key difference Gnm the studies bazed on aggregste date, as noted earller, is that the eftect of bootlegging is in the opposite direcuon; boorlegging biases the estimate downwards from ns we value. l. Est{matioo Methods When the price of cigarenes increases, several dilferent effecis on behavior are possible. First, some current smokers may decide to quit. Second, some potentiel smokers may decide no o s smoking (this svould apply to bnth potemipl new smokers end former smokers considenng wheder tn stan smnking again). Third, continuing (or new) smokers might decide to smoke fewer cigarettes. These firat wo poteneai effects are commonly gmuped mgerher bsto what is ceped a "participation" d<cision: what is the probability that a given persnn will smoke? The third potential effect is cummonly called an m ensity" or use' eR-: given that someone has decided to smoke, how msny cigarenes wlll he or she consume within e given time period (e.g., daily)? Thc "eKpected" cigazene consumption for an individual equals the product of tlrcse two components, the probabllity of smoking multiplied by the expected eigarene consumption by a smoker. Changes io cigarene prices can atl'ect panicipation, use, or both. The overell price elartlcity of demand for cigarenes therefore equals the sum oftwo component elasii<itier. the elast city of panicipation plus the elast city ofuse. This potential decomposition uf cigarene consumption into panicipation and use de6smns has somenm s spilled over mto the modeling of the sclf-reponed informa in or. cigarene consumption from surveys. Sevnal studies have employed twocqua mn models. Equations for whether people smoke could reasonsbly he eslimated with logit' probit, or least squarea Equatlons for the number of cigarenes smoked dsily by smokers cnuld reasonably he esumated with lezst squares. Other smdies have estimeted singie equations fur tbe number of cigarenes smokcd daily by all respondents (which is necessarily zem for non-smokers); such equa ions cannot reasonably he esumsted with mos regressr n-type methods.
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Pnwn,ccto"nCOnsmEnn•t. PN[YqgCDATR[QUESTOFCOUrvSEh A. Potenflal Problems for Time-Series Studies An analysis based on time-series dma should control for vatious facmrs that were potentially imponant over the period covered by the analysis. For cigareties, these factors have included ihc following: • Roll-your-own cigarenes have declined substantially over time in most countries. As a esuh, studies based on saks over several decades of manufacmred cigarettes, mtal cigarenes, and of total weighi of tobacco may lead to different resuhs. Going back se eral decades, few n ihan mokers. Smoking ra ong m and w u the United Stat substantially different m tlre Ime 1940s and early 1950s, then grew closer ovv ;imeete The smoking-age population grew rapidly in the 1960s. At leazt in rhe United States, mokers hegan to smoke in sheir teens. Combined wiih the baby boom, the number of potential smokers grew rapidly in the 196os. Tobseco per cigarette has changed over u e, panicularly wish movements toward low ta cigarenes. • Concemsaboutthchealtheffectsofsmokingbav¢changedovertime. Typical demand equations are based on generally well-accepted economic theory, so economic theories specifc to cigarenes may not be essemial. The so-called models uf"mtional addiction" are fundamemally differenI from most other demand models and may or may not be apphcable to cigarenes. In some cases, matching the available dats to the theoretically appropriate dara is di/ficult. For example, m some cases priee dam may he available as of some panicular month every year, while consumption data are for the year es e whole. All anempts to map that price napshot to the year as a whole are imperfect, but they do not necessarily invalidate a study Construtting ~ariables cam mn into other problems. Sercral smdies ofcigarette demand have failed iu con rol for general inttation in prices and income. This is a fatal tlaw (or a demand study. Other smdies have connolled in what appear tn be inappropriate ways for changiog heelth concems over time; such problems cenainly have the potemial to affect the esumated price elan city of demand bm whether ibose effects are Iikely so be f-l flaws will depend un the apecific study.
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51954 0516 my awi>av aaYe'manwu~w~~se >ua~ asnwq~3~..n Puawap 1~ 1 I Y A sT~q~J Ft.>~+e i I ~~ x{y tdwnww ~ o .u1 v4~ ~y v [q Wwone ul -4 W Irv W WNedwm II ~ as.eaJJCSr~~ue~jm . ~ on>p a~ a~~, „a ~ ~ 4.~. u~vxxo ao V~o ' o>aiJn~~wry~m ie~qo aoa~;MGaV.~V WlMeans4awu.'mw~„au x'pa~e~a.m> ~ aya ww ~.wnwaaoelvnVe~>yl~lo..r>uay.p m W1~Y ue spu>.~'awmW'v+V.U'~^•v vw>x , va*'>VqJywqlelu1~way~~anae,mue Fo V 41. I t~a.H~.q . ~ 141 i v v .>w ~e~n>,x
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Parvtt,cc[n -o CoNrlo[nnsa. Pxcv.qto ni RcQUCST oF Cotngt The relationsFips among variabies must M1e comctly specified fof a model to be reliable. For example. an equation might fail sn allow for lagged effects of changes in faclors thal dete-e cigarene consumption; lagged elTects ate likely to be more imponan with quanerly data thanwith armual. A model that fails to contfol for lagged effects of pritts and other .ariables ean be expeaed to ovetstate the shon-run price elasticity of demand and to understate the Iong~run price elasticiiy of demand (due to typical conelalions in prices over time). Models with quanerly or monthly dam should allow for seasonal effects. but the omission of contfols - for seasonaliiy is unlikely to be fatal in analyvng price effects unless prices elso are highly seasonal. Fauliy estimetion techniques can lead to pmbRms. For example, models that comrol fof Ingged effects on consumption by including lagged consumption as an explanatory rariable should check whether serially corzelated enors ar a problem, severely biased parameter es ~mates can azIe with serlally conelated enor lenns and a lagged dependem varlable. Whal is koun in the econometrics literu[ure as "simuhaneous equmions bias" can arise in estimating the price elazticity of cigarelt....... plion, but these eff ts may not be falal: if simultaneous equa ions bias is indeed a ptoblem I, esum ting price effects (which in the abslmct is not clear), the eff- of ignoring Ihz problem would generelly be to bia.s the resulting estimate of the price elaslicity toward uro. in general, approaches that anempt to conuol for simultaneity should use single equation nther than sys~em methodz; wilh sysiem methods, problems in equalions mher than the demand equation can af7ecl the euimmed price elasticity in the demand equation. In general, studies that control for inFlation, restricl their anemion to recent decades (thereby avniding problems with roll-your-own and changing smoking rases for women), and anempt m comrol in a reasonable maMer for changing health concems over time probably provide useful infofmanon on the price elasticity ofdemand for cigarnres. B. Patenffal Problems for Cross-Sectional Studles of Politicel Unila Models based on emss-sectionai dau of politicxl uniu (1,9 ., U.S, states) share some of the same problems as those based on lime-series dam, penicularly when (as is frequently tho casc) data over time are usvd for thc political units.
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51954 0510 uw~ew~ w9aY esAaoW v°'Wwmuw1e a~/s tl.~ ai 3 a.iY r»ed -' 0~ ~e>aeaNJ.a fWmwz- w sa .Y.aJo,.aYayss~ = i+W'=s_tiabY~: yYl° e°~w4arv a^y° :~ e 11•'U'e'c. o~L,.~oPw~'~v artefa ueplwn:em s'~,ae~an aVl.ew u"~aeVwvVJla ~VinWK>Yul .w e.,a.y° ay~naw,Wy~ w ,u1ea y.Jeryw w>t~~ e aaW a~xa~ayn aavanv 6~av[ avF- o,v~wa .~aymysW ,~ww W=~'f v..iJwnruw anwVSa o iam.eaq i~e a., J~ry aaoyx ~'' ~! i~ a,, s, svnLa u ~ e J~ys ui1AaV.1u Noa'i,WnJ tlNV1v3o viLL .oee°. aae„~e .iY va ~ -a,J.uv°ux 4[msn.tl•ua~-Ir~m!v~ayso~aiVw...es.V,cav n v i s »ud wo~l aY!stl LP' . . Pe Y . e .~oo~vub~)n ma5ny dWY .I~~w'li" N'u4.uw w~ou = We9.a >4, >eY• vea>W ,e1 ' ~'v~nYOU.woaa.yiw=nv as ' ~S ayasea~ ~ sv 4 W eMa s>slveHia,dq s» aVw su~en Vnys aa vaudlv>Na'u p ~,v ay N jo aev»Nna IVC>F e Ie4wN~>q'wi 4I v qvrya's ~r~ol Y~1 aAa ; M spvnsnm.ueJwwa~e 1l W ~ ~ ~ IatnUSno S v' u ~ J acv~ +ve wu~awvl e ryVedJn. s~ y'f.vav aa~Y.'~~e,qo°aay,.w<a¢tveax U ~ ~sa~~eaau)=aa<v° ^~ sa9n~in~IJU Ivnan~~('i'U ~ °$
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Pluvn.EGCnarvnCOxa'~uEnriar. -16- Pn[vnu[nwrRr.QUESros'COVnsEE ns discussed abnve, bootlegging tends w reduce the esumated elasl cily below ns tsue value when indivlduel survey data ares used. Several 0fthe survey~based smdies have a empted m control for shon-distance bootlegging. The typical approacb is to zliminste from the sample survey respondenss who live within some specifed distance (generslly 20 or 25 milcs)ofastalewithlowercigare e es:detailsvaryconsidereblyfromstudytostudy; because any anempt to match evailable cigarene price dets to s ponrly observed place of residence (e.g., county or melropoliun area), when some munieipalities impuse Neir own _ cigarene texes, is necessarily imperfect. Another spproach h, calculsted the dilTerence hetween rhe "local" price and the lowzst "nearby" pritt, ifp^ces in one or more nearby arexs are lawer shan the locsl pnce.' , 2. Estlmates of Overall Prlce Elssti<ities Table 4 summarius the eslimaled overall price elasticilies estimated using individual survey date. Results for teenzgers and college students genemlly suggzst tbat they hsve higher demand elesticities than sduhs. There higher elasticities reflect et least in pan higher income etfecls (cigarenes form a much larger fisction of totsl expenditsues for teen smokers than for edults). There also is likely to be a sorting process over time; teen smok<rs ptesumably inclode a mix of people who vary in Iheir anschmen o smoking. Over time, those who get Iess pleasure from smoking (or anach more weight to the adverse consequences) quit, leaving a group ofadult smokers who have a stronger otrachmsnt to smoking. In s study of teens Lewit. Coate, and Grossman estimated the overall elesticity to be about .1 44. Chaloupka and Grossman obmined e similm cstimate for studentf in grsdes 8,10. and 12 (-1.25). as did Chaloupka and Wechsler for college students (- 14). In contrsst, Wasserman et al. estimmed a model for teenagers in which the estimated price effect on total consumption has the wrong slgn (but does not differ significantly fmm uro using standard tests). There is no obvious reason why their results should ditfer so markedly from the others. Asu bomleggingatfe<nbnAM1lgM1-p-iu as(wFicAim ues)andlow Win pd«areas( Incnexpov~ge~<nes).w~ANewrv<rAaseasmaiea~now<r<cm<reDis~wnsMiot«on<emed ow-pi« ercas: ~be self-r<poned<onvumDSion by usNen~s ofsMSe <rcaz depenason ~M oburvetl low Onc<siniAOSearess.
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Pwvn.EGED aND Co1r1DEVTIaE PaEr.uD aT REQDESy or Cotmsct, umpion. Seversl such studies u e"parel" deee, wirh u- series dats for each of the political jurisdictions. , 3. Using survey data self-reponed cigarene consumption, relare cigarm umptien for individuals to priees and oiher facrors that differ ecross the regions xhere the individusllives. We havc reviewed e large number of studies using each of Iheu approaches. In general, mese studies are consistem with the view thar rhe demand for cigareues respoms to changa in the price of cigazenes: higher prices will reduce consumption. The specifc eslimates ftom Ihese smdies vary ecross s consideable range, depending on Ne assumptions. dsre, estimarion . tecMiques, and other methodologiczl differences in the rtudies. Taken as a whole. houever, Ihese smdies provide convmcing evidence that the demand for cigarettes does depeM Do cigarene prices, with a xhon-mn (up to one year) elazticlty rhat is almost eensinly in encess of -02 and may range above-1 0. to those studies that have estimated long-run etiects, the elarticities arc larger still. These demaad smdies are similar to -dmd demand studies for other productx, but frequently they take into accoum some special features of cigarmes. For example, the eggregate time series studies typically estimate equations that relme cigarene consumption to cigarene prices and some furm of aggregate imome, while coritrolling for inRation and poplmion. Changing heahh concems uver time have cenainly alYeaed cigarene consumption, so anysmdieshavettiedtocontrolforthemmvanousways. Vatiousformsofgovemmem regulations affecting cigarenes (such as requiremems for waming lahels on cigarene packs and limitutions on smoking in the workpiace and public plnres) may also hsve aff-ed cigarene consumption; some studies have tried to contml for these types ofeffects as well. The smdies bssed on cross-sections of states and Do survey data ofself-reponed smoking behavior likewise follow reasonxbly wellnrodden ground. The range ofcigarene price elasticities estimsted fmm these studies is comprable to those reponed for many other types of products. in general, elarticities for narrowly-def ned products (e.g., specific brands, such as Classic Coke) can be expected to he relatively large. while elasticities for more widely-defned produccts all food) can be ezpected m be much smal lee The range of price elasnciues that have been esumated fm cigarenes as a whole
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Pwvt~ecso anu Corcrtntnisa~ .12- Purart[narR[QUCSrnrCOtm- eonnol bener for changes in health concerns and other factors that are likely to affect clgarene consumption across the country in ways that are ditticult to measure coneretelv r The one potentixl drawbxck uf these studies is Ne bootlegging effect. U.S. data at the statc level are based on tac-paid sales. which may exceed consumption by residents to l-tax s a es and fall shon of consumption by residems in high-tax sates. lgnoring the boodegging problem with these kinds of data is Iikely to lead m overestimates ofthe nue price elasticity of cigareue demand. nt least fow swdies based un cross-sections of states have anempted to connol for bootlegging s Banagi and Levin estimated ao econometric model in which thcy tried to control for impons of cigarenes due to beotiegging inw highpriced sta s. to addiuon to a standard price variable, their modei includes a variable that reflects whether residents uf any given state have lower-pnce clgarettes available in a nearby stas. Thelr model attempts to control for the fact chat a price increase in a high-price statc can lead to reduced sales due to hootlegging into that state; it does not control for the fact that s low-prlce stste can experience an inctesse In saleswhenthepricemcreasesmaaadjoiningst e. Withthisone-sidedcontrolfor bootlegging, they found a statistically signifcam price elasticity ofcigarette sales st the state level (ahom-0.2 in the shon run and aboot ten times that to the. very long run). Baltegi and Goel used a"quasi-experimentel" approach that, in essence, compared changes in sales for states thst changed cigarene uxes with changes in seles for states xithout tax changes. They perfomted sevetal different comparisore in their anslysis, irrcluding one with no correcnons tor hootlegging. Another approach limited the comparison group to ststes with linle or no bootlegging. This approach controls fot ahe fact that states that "expun" bootlegged cigare es o other s a es can expericn<e mcreases m sales when prices nse to other stetes, e en when there is no change to that state's own price. Yet snother approach limited the>ax o~wre~ n attnead;con e~te~n r ~m .ero.rnmem. c e ~er. ammaa e.rtm..~nn.~nm~ma::amwion:a t..a.ws. enhn f+il<d to eonvolla bhootkggingw appear io Ee suspec f r mh<rr<ssons. for exam0le.olyonrantl Slmon faileE ro connol (w bomleSBin6 in obuinin8 a one-Year<lasticiry eaimse or ndLyontai/edto nat IYfmbowleggingbmalsofwy mESUr<eRe<tsm
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OZ50 65615 Demand Functions for Tobacco ~mn~. mMa~~~„e .60-n~a~ w~an.4. . ~al~:.++.:.+iin~2saaameas a~0..n~ai ~ mMmi ~The .mokin~ nni~i~i~n ne'r~~nd linka I .mailer pnw aml ~Mla/me elss~'c~19 t~una~lk .km nl /. o ww. 1-1 rtMama,mllie~nxll~trc~4mme
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Pxsvlt,[ccuanaCOnrto[nt•t.~ -IS- Pnev~R[naiReQU[siofCOUnS[L In a model of rational addiction bnsed on survey dma. Chaloupka estimmed taal long-run elasticities for adults in the mnge of-0.3 to-0.4 o Lewit mM Coaz<estimated models with overall elasumues of about-0.4. Their es imated elasncmes for vano s age groups (20-25, 26-35, and over 35) were sometlmes iarger, bm these estimated price effecis generally did not appear to be statistically significant. Using n Tobit model (a questionable bur not obviously i ncorrem appruach). Russo obmined an overall elesliciry euimate uf-0.5].'o Wasserman et el. es imated models in which the price elasticiry trends over time, starting 0ut with the wrong sign .(po5ltive) in 19]0 and becoming negative in the mid-1910s, reaching a twal elasticity of-0.2 in 1985.11 They had no plausible explanation fur why tbe price elasticity should be trending over ime. Wasserman e, al. enributed their relstively small elasticity estimates to their inclusion of variables ihst control for restnctwns o cigare e salcs aod consumptiun workplace smoking resmcu ns). They reponed that adding auch variables to the models estimmed by Lewit end Coate led to much smaller estimated price elasticities. Chaloupka-Grossman and CAaloupka-Wcchsler both f0und that explenarion unconvincing for their anzlyses of teenage and college student smoking, because inciuding similar variables in their analyses led to only mmor changes in their estimated price elasticities. 3. UecompositianofPartielpetionandUaeElasticities Table 5 prescnu ihe estimates of panlcipalion and use elasticities for ihose srudies rhat present separate resulis. ROSUlIS differ substantially from study to study. Some studies of teens (e g., Lewit, Coa e, and Gmss an) M1ave repnned substantialiy larger elarticities for panlciption (-L2) Nan for the intensity ofconsumption (-0.2). Others for teens (Cheloupka and Grossman) or college smdents (Chaloupka and Wechsler) repon reughly cumpareble clzsticities for patticipation (-0.6 to-0.l) aod use (-0.]), when their samples are restricled to CM1a/oupke'smodelofniianaiaddkdm~i.ilawedfornumnous«awns.IrrclaCingdamDroblemsesrimation oach. aM m.annenru(po~enual boaleeeing Drobkms. us no~e emDrroconttollo.boonegging. s o(~heir model, ane wnb a Pdssonrype mMel rorthe namherotpscks whhemwe naodard iwo-Wn modehwilA a biwy logit for iM1e panicipation eenEan,xdi eryleas~squv<sr<gression<qua~ionforini<miryeonditionalonDanicipuion.lTePOisson soach uems iheornical/y unamac~ive. Wt bdh approazhes yi<Ided simi4r<aimm<s of overoll pn<e ® cw~wa~w51959 1 501
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PxmEEC[n Anu Co+'FlnE1iIAL PrtLPARED AT RLQUEST OF COUgsEL Iszues of proper equation specifcation arise with these models, beeause rhe number of cigarenes smoked per day is aro for a large fraction ofUe population(those that do not smoke) and approxmately consinuous (taking on almost any value Gom une or two cigare es up to n.o nr mofe packs) for the rest. One fairly smndard approach to estimating s model with such dam is to es imate one equa ion for whether the respondents smoke (using binary probit, binary logit, or I....... s methods), then a second equmion for the amount smuked by smokers (asing least squares methods). Vanauons ou this approach, to control for possible - correlmion in the enot terms for the txo equations, may be desirable. Approaches that vy to es tmate directiy the individual demand for cigare es (e.g., a erage daily number of cigare s smoked), including the huge mass of uro values for survey respondents who do not smoke as well as the positive values for those who do smoke, seem questiotwble at best. Approaches that fail to provide special treatment for the zero values (such es leart squares methods) are inappropriate. Appmaches that uem the zero val...... pecial rzah.ations ofan otherwise con mu us process (e g., wish a Tobit model the "desired" daily ronsumption ts a contmuous var ebie that can he either positive or negssive, but "actual" consamptinn equals sro whenever "desired" consumption is negative) are not obviously inconect but seem que uonable. Similarly, epproaches that treat the zero values as ordinary realimtions of a diserete proeess (e.g., a Poisson model) seem que nonable Lus not nbviously incorrect. Problems can anse tn mmching price data to the respondents: the respondent s locatwn may not he known ~ith great arcuracy, or prices may not be available for local areas. Related to the problem of matching price data is the issue of bootlegging. Ualike rhe stuatwn with state cross-sectional dnta. bootlegging does not aftect quantity estimates; the survey respondenss repon all consumption, notjust that of cigarettes purchased in state. However, the possibility of bootlegging does atlect the real price paid by smokers in high-price sta es. Smokers m a state with high cigarene taxes may he able to purchase cigatettes on a regular basis m a nearby state xish low cigarette taxes (ifany ex sts). A ssudy Ihat fails to controi for the possibility of this type of eigarette bootlegging by smokers is likely to underes hmate the pdce elasticity of demand in higlsrax states, because It overstates the ef<ctive pfice in those smes (and hence iMates the denominator in the elasdcity).
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ua aq, roery o,=,°e° z,nu,svx, ,. , n o,su„ a,.sealdwev Euddez es)o.G~x, a o n ,h:°,. weD Rl+a~.ne v~;: R;a:po+d P~a ~.D,.ne~e p;!°. a;as;l~ae ap R;~ ,'a°~;a ' Dlno aaalla4an5ase +ayes naV,a +RI'+vodwa, vata'p nnfzaua.e9,a aodn ryws,VB!w sPi>wnsuo~-sa Pasep'si>pow, ry,»UeRlpen, w,VBiwuaiWwns I,aePUesal ryP!ed~e,uaam,ap llP , vm>ef +ay,o pue sa!sd o,+o!neyaq 8u!ryow. atelat teyt sppow atew!sa pue's,uapuoASat ayt ot etep a>ud ayt yatew (ysom to) an!I stuapuodsat F-qt waqm saa+e aiqdet8oa8 a~ to; e,ep a>ud taalioa ot alq!ssud s! tl Fep nd saua>a8!>.(uew moy'os;!'pue sayows wapuodsv ayt+aytaym se y>os'8u!yows ot patelat suoitsanb paase aney satets payu[) ayt u! s.Gn+ns aBmlJo taqwnu V eteQ.G-g uo paseg sa!pe{g "; [tualqoad IuPUatod 'J a ets Z u, sales snoauetodwatuo> w pa»a8v .(Ipy aq ou pinom atess uan!8 e m asea+w! a>ud tuaaat e;o st>aUa iloJ ayt uayi Yueuodw! ve st>aAa pa88al;! :uondumsuo> auan8!> uo s+ot>e; tay,o pue saaud)o st>aUa pa88el ,>auv ot I!e; Ilax ,(ew (s>ea,(+aq,o tq alqel!en e,ep ou y,!,n rea,( ai8u!s e to3 sa,es ssw>e step lenuue , sssa>al8u!s uopaseqsa!pws'aidwexa+o{a, osieue>swaiqo+d+aytp s(ate , sa.(Ilea sa!pws aqt tey... s! y>!ym) ralor;o Rn>itsap ayt ueyt ssal s! (sasoAmd waa,n> +o; tuoqe ama am teytn s, y>lym) uottdwnr o>;o A!>nse)a aaud ayt zates xe mol u, ua+e8!a asey>md ot vawnsuo> to; le!tuatod ayt uan!8:puaw>pJO.(t!>!tsela a>ud ay, Jo apm!u8ew ayt atets.ana o~ pat>adxa aq ue> satns S il uo e,ep leuopaas-ssot> y- 8u!88apooq to; lonuo> ot ampe;'luava8 u( s are8!>;o 8u!189nws paz ueeto a>ues!p ta8uo( aw . atayt'uat!ppe ul a ata,yip a>ud ay„o taedw! tuaredde ayt 8u!teta88exa snyt's e s orn, aqt u a.r,taq - sales . atay)!p ayt a a. taaUa ytog s tws xe moi ayt u, ondwnsuo> anoqe way, 8u!s et pue satets m,-ye!y ayttu! o!tdumsuo> molaq sales em>npa+.(qvayt's x ta.vol yt!,.. sa e s riqreau u! sauan8!> aml>md ot san!w»u! stoaplsai t!ayt anie sauarz3 a vo saxet y8!y asodw! tey, sa,ns .wayt a nsuo>,(a,p y>!ym , asoyt ueqt taqto atet . an8!> sey>md uawotsn>yaiymotw xaaytRqes are8~;ouondwnsuoawo+;+a{I!pya!ym's>uare8!a ;o szles p!ed-xet+ J etep uo Pxeq are Sllen n s twg pa,!un ayt u. sa!pws -etep sales lar.al-a, s eu!sn saynts leu , ssa> ytim walqo+d lep atod aofew oy, sl 8ui88ai,ooq auareMO sVnU~ lU ts3f103N tr U3tlYa3Nd iv,ix3ai.f.r'ro~ aNr aa~33,nrod
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i ww ..r+ W.V w~i!au~~jYryW,m s ta ~i.uenvv,J~utu ~inan>axvw3a .. . ( 51959 0512 ~!vMU.+uanV~aM>~wa~m~n~ ,.we'! M~mW ~?9FWPVaaPP~ V.:~j^... wn9!yt dPm m ap.m ay Q. Wuu,,. u. uopmxg Auq ~MaTUI:w,4WPpM++yP9o,l.dm.9 a..49!4• .. uta9 Ww i.aa.x ee vu. w,yne,a.ry u!ul NI un.yWT wtPm!a p unM„mum ayt tNt V*ums• auY aw .ryy m upt »!,J aun;t+qwlWdp aur Iq o, m>. w, wMHaM.mm~myan.+mtavNq.~m wn..il !Lya,wtA, 8,lqywpw, Wway!mq.vqeywu yNW Wyw.. pua,,yP. wa Ymnq,mtu, [y .aun,, P'C JM mtmues.m.auauy.! Fn.vwa ua,.y!P au.4, Fy t9 wmq. W F! . -W.Y%m.aM ~aW!aVtt,uoV.(p.q.atuoa ~'..^'!.n:PTw°'IWwule.9uuaNW.wmWuaWi•U~P. ~. !1j!4+ Wt W aW I,q'YV w!i'aum /A.maP+y 4ii.~ um,ew s,1 WpM tIw Ww~ay aY~ V.W~ft. a,u, .P wnmw ii x^l~ ~68/w~aqy '.naao vya y.ry. uf ..aF a4, tw!.f. nVJ u! WtiM'i W'.a°F Il.•ol Wunpo an. ua!Wu,mum W.aayu We i.uuw ~w.W .a.uwU!P x•V!. 'aa.m vu.uM +4, kl ua.d aa.uuou ay, vwpe w,w.YP ua u µa!W 'uPa. uwWu,wmapwaqo.1wnmayy v .vJ aud W, m auNUUJStxu> a.uwLVVUwuP „o a.W ~~,a. .ac:!yt wt ~oxJ~m„m n ..J !.m,m aay!aum w prl~ ro !wwap ~~~y!~>>>\\\ .v . 1!. I / asaaJu ~s4eu.eum8a layJ. ' '' ~ sne eu na/f s,^,+-" t• (t I
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a. r tn<v r. im~nalaRa~M~~~,~arc~.w. e.e. I -_- Tabl. V~ wMe ~M&+mtatla ssk<1M yevs lor the Ir<dal _ aretAeb~<saobxrv<d h<M1igAesl e6urvM pritt. Fw <om- bkM1poi.l on ~M dema*d curv<, it is eridmt fmm tM table .itAtM<.crotiondr9lr1fabk VI .Ji elnM1fvnhe IFmt Ihe elgaaloty ol dmuntl is Mghn Ivr ~h prim th.n /m b. pi<es. M /dbw~ng mn<IVSUns: A tc AI<M1nugp<Ae«lalloa:~p volrm.nddbnauxrc<onvumwa*~d prim M1aw. s rysiGvr keM~ demaM rnrve and ~AeM1igh net fon htwnm m~wmptwn aml pric<shaw the eais~emeol e<la+ B e rtletionsF~p Lnn m umwbn aM p. LLSO 655L5
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PRIVILEGED~NUCorcFIOENitAt. PBEPAItED ni BEQUEST OF COL'NSCL II/. BLSULTS BY 7YPE OF STUDY A. Studles Based on Aggregate Time-Series Date Table I summarius Ihe numerous itudies hesed oa sggregate time-series dala. No one of these studles provides compelling e,idence on Its osn, due to the pmblems inherent in analyzing time series data that are domneted by slow trends that may be changing over time. Ho..e er, they are generally consistem in fnding signifcant elasucnies otthe expecled sign. - Virtuallyalloftheshon-runelasticitiesare-02orlerger(inabsolutevalue),withmostin excess of-0.4 (the Iovrer end of the range specified in Kip's book). For those studies that esumate mudels that p-ide long-run elasticities, those long-mn values are generally substantially larger than the conespnnding shon-run esnmates. A few sndies heve failed to adjust cigmene prices for inBation: Ihe usual justiflcatton for this fallure has effectively heen thxt the eslimated equstions were more acceprable without such an adjustmenL Cnunting these studies as ones in which Ihe priu elazticity ofdemard was esumated to he negligible, we are still lefi with an overwhelming number of studies (Bawed thougT they may be in mme oNer regards) in which the price elasticity ofdemand was enimated to be negative and substantial (e.g., in the range of-0.2 or larger in magnitude). B. Studies Bssed nn Cross-Sections of U.S. Stales overTime Table 2 summanxes the studies bazed on panel data se s of U.S. s es over tsme. These studies provide st ong evidenu that tbe price elasticity of demend for cigarenes ix Iarger than zem. The shon-run eslimates are almost ali grealer Ihan-0.2, with most greater than-0.4. The long-run esnmates range fmm-0.]4 tn-3. What gives these studies their power is ehe relatively large data sels on which they are hased. A date set with 30 years of dats on approrcimately 50 statcs hes roughly 50 iimes as many ohservations as does an aggregate nauonal time senes over the snme lime. This relative abundance of dam makes it possiFle to
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cco ,srvo Corcrio[rvnws. P- .20- Px[pwncn.rBcGUSSiosCOUrvset with a use elas iciry of-0.10. In the tw0-equs mn versmn oftheir model, Wassennan et al. esimzte both pxrticipation and use elasticities that nend over sime; for 1985, ilre last yea< in their sample, the panicipaiion elasticiry was-0.11 while the use elasticiry was only-0.09. Russo estimeted a use elasticiry of--0.I6; his total elzsticiry 0f-U.5] implies a participation elasticiry of-0.40. In contrash for his tmional sddiction model, Chaluupka c0ncluded that panicipati0n elasticities must be negligible.lppolito. Morphy, and Sant (19]9)" estimated separate panicipation models with survey datz for 1955 and 1975 in which the esomaied prlce - effects were slightly positive (economically thc wrong sign). Overall, tbese results suggest that individuals respond tn cigarene price increases both by quining (or not ataning) mid by smoking less ifthy censinue (or stan) to smoke. Neither effeci appears to dominaie, although the participatioa et7 ct may be more important than the use effect, especially for adults. For teenagers and college students, one study flnds tM panicipstian elasticity to be substantially larger than the use elasticiry, while two others find them comparable (alihough panicipaiion appears to be sligbtly more important than use even m ihose swdies). For adulss, several smdies estimate participation elasticities that are substantially larger than use elasticities, but only one (Chaloupke's rational eddiction model) finds the revetse. Note tbat a strong panicipation etkct relative to use is ronsinent with models of re ional addiction, which ptedict a bimodel disnibmion, with some n0nsmokess asd snme people who smoke significant sm0unts, with relatively Rw panicipsting at 1- levels. 4. Imponanea of Conarolling for Bootlegging Some studies reported resutts wiih their "fuil" samples and with tbeir'4estricted" semples thzt eliminated survey respondents living near areas whh lower cigarene prices. la some cases, the resulting etasticlty estimates were virtually indlst5nguishable (e.g., Cheloupka and Wechsler for college students; Lewit. Coate, and Grossman for se nsgers), which suggests thai failing to control for bootlegging makes linle difi eace. Wassertnan et al. (1991) did not ptesen separate estimates but smted that the results fnr teens were msenstrve to cenuolling for r-<ar nnaaem i e~edpanicipa~ionelvniciryo!-o.l6farywMSbmvnegligibleus«lesiieiry. Ippoliro.MUryhy,vd5a apparenlydidno~ emqraconnolforbtotlegging.
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51954 0529 eixxr.u, w ni /faaal %s a~if f~ ^•a i614 1f i ff i 1 f..f n-si6/ I. ./ . . 1 ueu5n~~f v II vf !.~ v+ Fq F ~ '/~J1 "' Fq Fff.v.~P RwWw +avrvl . If1~JP K+I+~.fP wf ~~n w~µvq f~ ssa+&P mal Fu.. v..~af valam'awnf... M!falef9saf I~.fe.wf4v~ ~ . o..yu v.fFlafe.edr.ala~i~e. 16.µf JaafaP of f..~~af aM 'Wniau.u Ff~lYlvaa.afw~if~nv fw'.wv1 *ll =w.of . If~ . ~/Cla, w~_ . u ,.~vyam aPUfn,Nx~~>ae~~~Pf~~m~f~~,~f~l mws 1a )v=1t
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Employment and Unemployment in Great Britaini Some Regional Considerations` __ I ~_ e e£e^b - 'e~ ~ _AM _°..: _.~ ^A8L .EaY ~ :SY ' O : . . - e 8 .5 i I_ ~ _ . .. . ., . .. ~ .. .. .. a. Jecryle sl peuLlem. Mimplica FaveCeenxellwut~iacl-'AttM1wtime.F~nIM1e.<w. ~ry ni 1 si aicv ng tlK F.~g.'uiall g~~~e~~~p1 ryme~ a,ta tM1e con~ce.~1 11e J:.c..m:, mn, ~.Ueitn mploy oESO bS6SS
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51954 0523 W'lau ul.ya~m ~I ~ulw.rv•An,~a.wtdv,,.rw~y,l,nM.nd,piai6 ,.7 e ,~d(:~~'v~ I~uWv aN1LLwrsn , . Y•IVix o/ U ~q v~Mrv F9 N4a9e MIILw IIa1~~l~unselame a ~p~ap u oa~t d w ~w ra+an~':,~i a+an rt ~~v Ivlxl~ uu aww ~wv~.,. Y^~ wWaa ~ aMlVowtilawl,aw.a..oawuulo~>xiw~xlv.l~u~wr"~o'r no1F,o ! 1 1. YI - a 11 I Plalnwo,e+aF•,wnan~liwy~1 u! ny, .ai),~arl V w~i~~lYVOV ~r a
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Palvtt,EC[a u.D ConrtDEn'rtn~ PRCewaCD nT REQUES'r OF CuUn'cEE Virginia to high-tax states). Second. they cstimated tuo different types of models: one a "myopic" model much like that estimated by Baltagi and Levin; and the other e"ratiorul addiction model. In their myopic' model, which improves substantially on the Baltagi and Levin convols for bomlegging, their estimated one-year elasticlties were in ihe range of-0.2 to -U.4 (consistcnt with shc Beltagi-Gcel estimates), while their estimated long-mn elasticities werz in the range of -0.7 to For their'tabonal eddiction" models their estimated one- year elasuctttes xere about -0 4, xhile their es imated long-mn elasucmes xe e again m the range 0f -07 to -0,8. The fact ihat both epproaches (ihe "myopic" and the'tmional addiction') lead to similar estimates of price elasticities, in a isrge data set (1,517 observations) that conuols well for baotlegging and vanous kinds of unybservable variables (using flxed effects for both states and years), suggesix that this is one ofthe most reliable studies published to date. Sung• Hu, and Keeler used an approach that somewhat resembled shat of Becker, Grossman. and Murphy but on balance is less powerful. Rather than use all sta es, they ased only I1 Westem states. Rether than use a long period, they used data only for fiscal 196t so fscal 1990. Rather than use fxed effects for stytes to conVOl for the myriad differences across s a es that persis over nme but carmot be measured well, they included numerous demographic variables. They did use vaeiables to control for short-disartce bootlegging (udging long- distance booUegging twt to be e Droblem for their states), but these variablzs epparently fail to control for relative populations in a suhable nunner. iTeir esnmeted clasuct - somewhat resemble those of Becker, Grossman, atM Murphy: -0 401n the shom - and -0.49 in the long C. Studies Based oD Sarvey Data Studies based as surveys of individuals offer two important features relative to those that use more aggregate data: I. They cnn be used to decompose the overall elasticisy of demand into "panicipazion' and use componenls iazt:aaar<:waennairarerlem~mmtr. °noamemoar.om, rr w e==aamo g
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954 0524 NL) w~.e•alv'~ ~le~l.. I+^.[a9eunvsllu~i>.ISU~JIn~l~u wa1',InFy.!~.elasu.(s) J~FWae~w.~ FV¢a1...xq4Vx.r> n.xl~lu~J Iv,l ~.I wd.4ea»w . J . n ~ L fe~e~ , aua>e ro~J neulaoJ Pxewap ~x ~Fi a~>r~~a awoax s11 /.) . 4JJW ~J .mLOu.~ w.~..xcuw~n~ ~:. ' epW ..l I~ I . .i,.vs
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I hs h1 Gv,A"The C~ h.oti~ '~' .emand XX tor o X i. l.~0 1 hta,~ ~9~-i bacco in the U.K.' Pz> >7 .,<i. n... i. ,. .«oim<-a..,.n.a.o1 .N ... ,.<n.s.~~,.,<..
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1954 0526 . ,v.~ awo+ „~~tr~le~9rvll=Nd ~ rwe*IrvU= a . Ir..l.t'WIl=t)~'v (~LYivll=d z v.;'=l>vu==in ', a'.l'=lmu=vn „ (.i~•leuU=~lJ x I~IfvMU=`1J ' tull=~n w- . i I rv a V.t/u)l-ir 1 (-.ttvV=n -~ 6YrvU=J 'z tPoV s ~ i •~rv+V.< >
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51954 0527 ll .1 . - w::: F ; aw . ' u w~l ,„~av e a~i~ sa~ eueW.v ~W s~ ~I r rm/=m ~~i rvu n . » i
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se/r~ Tn.suPr ~>1's,n-bPrmv11- PneeheewsYOnioo!olsmeol.rsin~ne popuudon< n~ees~~m u~ e9Ps~~ln~se=en,-~Pr-rn-nT-i~ ~fl ne~T ee.cond=hypomasid>ppea`nmwePi=usible on ay.~o•~g~osods. , kon au,)
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s56 THE kEVIEV.' OF ECONOMICS AND STATISTICS [s91 n~er~•. t. H., u~'m y. W.u.M<e. sa w. E. 5u'u~.. ([» sdu. D." e o41 os y u. ' ermzNRSarYqEl~e~olFm.Ere.or IDdunmW elorM e ee./w.msiomrkd k.~tX% (M.y. smi). w'n (Mt Isa». I[a1 SDm~~D. B,~ 5. Dimmio Ite]NerXTN.,aes.,CO+W+e.S+..vfawTe<A~ Aei"/•ew+dFSnEmu., r(New YaR: Joho Wiley .oa Sav. lu<. k.. %XX W[ <M.r. ss5a). ~s)' [151 Tero.ei, R B., TAe Ae.rckw CI[mu+e l.am. [~s] N•do.x. M.. rA. Firw.W .l syqr: aamw~ ..y (New D...o: v.k uvimaq Prtm. ~eso). ibn ) Pvw.: Rerpae so P.ke (Beltimorz: p~~t el Ayri.ulmrz. Co.. Tbe )oW Haµ:u Prcu, t958). [[6] Uuua 6aub~ ~ bervke Avui Repan n (t0) Ni<Eow,NWVJIe~V.eCertiTrzUWVeMq+heu. ~ro Ssa+kik+. (SeletW tv+s. I9/6-is61). [st] Ua'<N 6um Depemm~ os A[eltWmrc. AO: [IS) S<Yre, S M., •'F.e~on AHet~WeA m~a mU~ s'' lsbt e.ktu0 pnHOy Ueiud~5uw Deqrmue. o/~µ.MJw~.~eFao- ~ sf~S~WMro: US. 4.emmmt Priauot xrv <)wy, issi). (xA] w- , l, C., Ir., eve R. t. Brooh, Fout [>l)6.oan+ouPr.N~MSAOd.o/CeeDFae.e,e:y. Qn+.Cw.e4p.P5.{.edTODOr.m.AE. (N.rvuaEmooml<5maie.Ne.s-0(Ctm6dd[e: 'mhrmaon&~inNo.d,NmWhwtiu6rcu WmMUw.+NqP.w.59se). C'oIWe.RJeWSSPoS.
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<a„mm<n,-<°,.. aJ,r £A•~n ol a~wiu<. uund T.o ,<namN< MPonm,- e °a lxI psw<~~<a xi`m~~~ . °<P is a S~u~s.Je~asicip. ~.NU1 mea,u~m vd. f~aduat deaine m i IaP~ittd~<an{<'~MtM1(ormulaionsaeeeQmlh < na.<on s"'r. N<m om.<~enio° of (R) Ph<m p J~ii_ `. Thae~o,e h~a~ ~a'6e ,anam o/ ~2~ become,mog , a~~~on. w<nat ~ 11
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£CONOME'TRIC MODEL OF THE TORACCO It;DUSTRI' 151 5. p L p u<rion Mem eer[d leaw en rodtt0001M1 Ee,N~SO xeynt r.pX[r p u[ronl[sswtPkCg[a Framrd< ~r ,tu, rWIIOW Ibsl e. SpA'ET Rauo o( net lul supply w tlo- Frmm 1d< uas n(wusaqel 9 Sp Flom /de s o~ir ~oe0ao~:a ti,.vP~e,rr, nn mr u:ag<I m. PncT Lnlvr, A.<•ne<,nnualnnea.mprin. n(nnW Soura ReDO•t en Tw d cro 5nl I I. PFx »n ma a Inl P- rpfiaai xnes-espmntm k (nnt,) < 1].SPMFP SupPonPrinWemfrnquhet Fromiaentity II.T etlgedbyPgrowensavup Sou.a:Ad•ica.•etSrv<ivtk, PoDIPri[e (IaJOIESI la. CC0,1' Ciaa reue [ um~tio Ann n amaP wn- lbiilion tes) aumPtion.5arrn~Adnnlture! Is.CPRO Cipm,ePeodunian Source A6~tru.olSran,sk.r (billion[ dpntt<s) ss. Ln/ (IM/loooDea [igarclte boone: Annwl ReDor, on To- u esl ro Sn< I>. CDIS n(unge)inw[ig- rce: A.n,wt Repon on Tr ar O.rn S,a,ulr[, ~ (IaoJ Im) ta. nDtsP ppearann t .mm D (usage) ei d~uPw .~u~ :wh. souan: (IOODibs) nuol Repan m Taluno t9.5TA Sao[koll lateea So nxaDwee naPP ro,> ~P yrcr e.«n s,.o-mn n ro- e:ogennn,vP.;aak, L OT8DI5 Diuppn[ana into o0tt prdSourn: Annue/ R<Dart u[ts bocco Sqli,ek, Y en To- (IO~lba) d. PCAPY Dlspoubk inmme Ptt nprn Swra: Fsanomi[ ReDO•, ei sde Idell.rs) P•erW<nr s. xDISY Real di,Doubk inrourt Sou[ce: Fuenewir R<Dor, o)tAe Ibllnenaonn) • a. APCIG R<al Drln o( <igarettea rcWl ae Pnn ae9etW Innu/pa[t) C [u r Dri[ inau urwu oJ L6o. Sw~
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51954 0521 i./JzavW a.aiela,wunsw„elnwwi vx'~cN.a xi ~lu 4aq. aw+.w m, ePw~CP~W ~.~~,I!F>~m~+~4ery~,MUnPPwaP 41 ~p(1 Y wW ww mi~ ~n ~u~,.~ w~o~y s~~ou, rv~n ~w,,nn~ v~d~, ro m we'x~~~ ro~.~~ ~, :Mex ~.41 sss,-oss,wuadava.t-w,+4,as'nwaMicue.~~p • o, wdz'++4v.rawayo, ~v iew+~j~ Ia~ +•,t~wp lil' s ~.r~s+l f+a^s.~+Ir°w~1 A-td~sol ~, ry.qry x~ 'i.w4 .wv~ W n w ,~ P n ~iio~a• a Bw 'iw uvn ~»oao, rv s~~we,~n .y,4.; io . . .-. ~ , w e.W =b <a,wo.1.oi,.ov,..:,1- 1-1 1-1-1 -
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I >3ES COP
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~.<leo,r,,.;.a~.ro[<naashanw;..,<e<im ~gna~~ein.~xaae.<i ~: ~ai .oa ~e ._<Ge< s,ma to „<a m, «w,a w«-e p o a e- <to~B~_ BES7 COP1
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TM dlai~eXeaer Sreroo/ any 0 0 bya,. mtan mi.~ el a.my'yr<. <na~~, ;.~mwi~r.itt tx pn4~ ,yate~wine~,~n.;v,eww~massttl.yrse.Rw~mnieu t em~m.lo~ n<a~~,.a,m t« t...LLktle,inllnmre ol Au ema'n adult poln~lation wfiicb «tN in "Y', is HyecfN ta be impwten< o. £urtbeemare, me al the ma.t n~fbe nrresxoltnbaaocmwmMiunbesb,rn yr.y«r~«, ol m,.l~a m a«~.m~a.R. mamly . m~+saeo.Mw~m~l.~m s az mam<mxr. swi~er r.«mma - a~qma?o mym n)(21 ~ ~~M^by ,u(wlQv~ aty.o sP nLrwebc~bN ~)firA aammem by eddieg otM1era xylevtaryswnabks insvariws camb~atiwrs. we (mm< ~ y bRr.r r, .nM.~. r~ r v(x~ u.var anect ro~. m y, mv~r(m.v ~ap ya mi nx b.obini«dlw.ailr.mm~d~tv oalyo'e~l r 1c«/fi nets~o/1hv alhr e:y6vilwy ~arur~t ~ II val~e~ ul .01 leariy we ~epl a v nm.u.ri.d."ile,...~w/«aawme-mam.rox«M~T anable. were tiw lallowi~. el«Irl n vj~~s«I~~m R7.1 art s watdam.ruaH..imn*t.mimeas~r/...2a.o- 2j T «<Ma6 rl~uelezl.a>Stw1e~~I~irc.IMVOftl.eaJ..iari Ixctalmn.aMnrttl~e SZ50 455.5
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~M ~wx a.ow . I w I. v ~.., 11+1 We p !~arvrvu.i q~ I~wlxFO.u mww>vo~tnvrl (91 nuP~w zxl,~n>.~ ~eu, le~x,>,n k oyyo~ :r .~rue't>vUNw. ayaFUx(e a,.1 x~4iv -P mq>uPU,J ~e5uw.uvvryic ~MUma1W,~.u*Aa(~'F uw> auw ou~ ~° iPea 'Y s F-•~w~ k.n>. o, al9lsuvl4.w.vs rl (euW vv ~Nro ~f niw~i a l~ /. wvjslwe u.x~s(.y a>'~.w N ax~em>~~ww a'n (wel>,~~c m)~ _ uaPa.S .ru9n*~fnN >4, 'Fleil 'v~e>dl vl..~n~,. Si~( ~ iN,..o4s./d~l~x~lax~ q>v+m.n~, ~o silix.» ay.i. WJ r.Yi 4,Nrs / ,e.d~. vaw~l.~..a,w^^~ ,Ano u~ an,~ av m +una r. 4 n Inuqa,f e Few, uNl +a. i w"^ "~ (zl ,xtlFV >rox(e4x~suV P~w a>u,~ .1 vl ~~I~~i(~w~~..VSN>~nlsalnu~uotu(/il P~dh,~ s - s Y s~"~ ~+~iMF~r avda,x i,
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11 l5.psjez,Pa1 ~M<discoetinuwsvenaissipunous~hT {e.x<ep M m , ome. rela~iv v e venwn)e. A
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-ea£ onNol aa,udaat A•~~y .avna9 a+>v pvn>my ienvuy anwP! vro+3 apwPi wwi (sa+>e) (yna8ea+aevl+'WR O.YA "> (sa+>vl x .ao!!.xa!aa.an.aax,w>~a,i ~rnxdr'r (++.naP) tnwp!uai anry.a+>y TYAY'L (saue) Palaivpa?-sa!uSla!>Yn+V a8ea+xta8+eivv,3 NtlY'1 nlqo..vA +noua9oyu;{ eaalqeueA uo!tenba lenpu!pu! ayt )o w!ssnx!p aya uawu+ano8 satnS Pat!en aqa tt6! a>v!S v! van!8 n sai9vNw a911a mneue(dxa aayuni 'pavodsa Se.n W!Y> .wlaqpauyapaa:lapowayt)osalqauenayy inoqe'sa~nSPat!u0a41v![961v!Pa>nP ' pWWa91 oad!sal pa+m.any laso>!o ~puy. .a a+e8n>!t 11 ~ 8 >4lawovo>a 'lapow _ a9!aaawaa~nta'1'(dS)'a>iad ~ Iqviaan .ta!1 ~) p+tan> Itv a8nn H'o a9! lo tvawtev) ayt uaaq sa4 lapowaaqa eu! -pLn9 m, pa>aamroava anaG am walqoad a!ro~ip svw a9a •tmna.(vv vi 'apn 8a!.tnq aya uo Suos -008!!0 )xlp ot .LVisaaav s! +amad .S!odovow aeqa .punoae aqt un paypsv[ ua>)o a>e 91oa a aqt • ael vt 't>apaw )aa! aqt /o ap!s ev!!!ei aya vo .GaEOVOw an!aaaga ua patea+> sa9 s!on xaqt!o a>oals!xa a9l 'sa>lad vaddns (Z) pva vap>!qsa> Indlro (!) :slv+tvoa a!se9 oua /o nnsvo> vo!ava.saata! n91 '[£1 ta;>ew Izai v>azqm aya )o va,lvcdo aqa m Pavan+aam sry uaneveu!a»eqotayi!o>vaaa tl wopa anoqa +ol saunwae)ea( v8!aao3 'a taa)nvsw +ol pasn s! +apmewaa aqi, 's aae9!a !o ne!nvew ayI v! asn,al s! Ivaa+ae O8 tvoqe 3aai v»aqot !o s~aodw! leaot !O 's ua8!a puv leai o>aaqut yioq m, ape> +a! )v !s! C alqayea -.odw! a9t aan!pu! oa paiua- o»eqoa +o! uo!a>un) pwwap e aaaw!asa o> alqntlane a+ awo>aq a! asaM Ie>o!nay ~aq n,ya vary0 'nud (>!as!uosdo8yo) wnwryw aya 8u!v!c~qo u! z+v Rayt uryt stntlo! !eai ao! a>satl awas aya .Sed s.a.:nq aayto aeyt 8m,+nsv! yt~a pav>avo> a,ow a,v va.(aq ayt ta9a saans nsa9aotl.t4 s,ry,!, '[q!1 ..8m,.(n9 a9nua>+ad~•!o SJI.LSItVLS Q,W SJIWOYOJ3 30 .1131~133 3Ht
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ECONOMETRIC MODEL OF THE TOBACCO INDUSTRY IS'I rrcvs 5.-A mw Tou[m tecMiquef < /m nlidbYng s muluion 3u.. (ax+w) mudets. Fur enmPk, iv u eerf r 8tudy a/ the un9e Indussry, Neylor~ Ssusr, aM WJlac< (1>] useL spectrHi HoHiy3u aed aoelyMS o( varunce w nlidase an e<onomesric vwdA. _- c,...xe (r] a.sM. ArY4RwpmR hWr5a1 es. Toexre /.. y~an. Va: CStA, N[, 19N. _~ [3] &oedi~NpR.,~do~~y~TA~ ~exv~ _ Ce^luy Fwd~ B56). no (~ Le1J [3] Cvra Asoan hor..ws, 30~3ofe. A~ E.(te. ro Senro No. bs, NeM Gmim. Su4 Coliero Ralryt, s958. [s] Cbnsi, C F. Erowneuk MW4 wtl M[rb4 (xer Yark: Jeeo Wuer.ed daw 5^c, s966). (sl C^eF, R.~., Cawq: (EeeKKOCa)Tlie.,N.J~: H.ur~.~ ao). [s] CveM1 R. M.ea ]. 0. M.sq A BeteaioN r ol ae Faw (Ene4weea cties, N,J.: 3e 9s3) . Tep . E ceuUn:+.o S+.rts)r(an oxs no.unss)me w (>) G C. F.~ m ~ ' ~ /MiH IY i C ~mUnnmn.imil.r 4. (Jsn 933). [e] G rfre~D[hrwdJxB Pasws u.e s (AmsueNm'. Ner/tBeWeE PubLiWne Cemp^eY. 595/). (9] H.ensrcl, w., M. B SNmtib md H. P. MOke, M s.•xxe ~ae&.:nk~Deqnmme ot Healwa4iEEUu bu[ HaIW &M[e. 3PU01ic^ emenne N . s (Mer. svst). xw [.ol~h.e.o,.oal.L.DUtioans.amwrr.o. n - ~ +-n .^:.~~'ro..cm Lw . r~ iP iwN (nm.r: lo.:. suu Var<ruar eu(.n/soxuausrrzs,unossrm.n) 9sij. [I17 Hup, E. 0, ua L. G va De- I (Amn:tb. Sru~UN.:n4r*Prcus~9sA~M [I» /oek n,a.L.,BU.bYTeee.uCO~u.elNOnewe. ~ ~"'''`'~~,~~ suu n^4anN<^t~Fee,i9 )nuN Espe+imme ( v~v. [i5) )eWUO ).. E<orowenk M.:BUm (N.. Ya+k: I - s~wx:w M[Gn..Hm ewt Compxr, s9w). [se7 F46ee F M /NwM - Y o M~na Poo- i x.. ,.[e ^t Com9.^r. s9s3>, o H ] be se n 4aw well ~M1e model NI Dr^di<t the Ief~ ~R/icbn[mw ~ssoDVao. /4sure. [~s] lukmn Etrn e 0 n'~ p e Teea.us , O( cou , numher o( more sopfiistirased (esinesnue. uni s y o/ rw, 1955).
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- tl ~ ..<;a -~ .~ .~ >~ a~~~:a 0
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pp.wi.: D .d So~•res 11 Prled- e ,&Paea . ma.x. e prlp..pa). i^` oproau<.)~o rvneai em Mus nvoe i n ou peaau s. u ~~ pmwnz aispm.nie ineaanK popuk.an unes ss tn k& ruo~e l'ses {vanee hmsaDn e o . isselxl. mD l"+T0 n. contimo
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11 / ceanc,t TM ~ n. nurea,-t„~:o~ rnwua; nL n~ tamm>~~.n.nes~~. ~, e ~naN be pro~ d mi{m .,aoesvedoutM1e<t~~m.ud~nwmt M o pr,ee Nw. teen cbb'gMa .~~h~ na~u,<IVaetleene pnu ol tobatto.aT 9 e m1t93<Il)~1tl961!1))xseesLJlu~yu ~ne ~Pr~ -t s~+ -esatlaaPd s htos)N~ (>a) -`J ~ St-+9:?;)SY-(W3653 R~wsttl -so3 e»dXere ~t poi n pt M itl donN re 88ST COPY. m~we~ m~Vent. ~. n ~ ( h 'u I (eaxap M m )
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ss r.~ u,.<rs. sw . a. a . a~ama, m_ 1 a ars., ~ a~a a.• a~a INwm•eonpe.ow•... F'o 3~ ppen6~a [H. Tobatm G p Ltd. AEST COPY Saving, Inc Re-examinati Expend nuv~* : mcdel Du ra ne postWatu Nat a ~ persanal Nspose a pemnn s thepeper exptt~e6 a,<aa'tWe +Ni . ~resptttivelY~ Ne Nat bav<Deen tivi6e6 Lyt .
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(,..aTRIBUTIONS THE ECONOMICS TO OF ECONOMIC ANALYSIS ADVERTISING so xo.~o.o.r Peno. I.TINBERGEN RICHARD SCHMALENSEE xN~nahY JCa/i/mmio.SanD+ego Fdirorz W.JORGENSON l. WAELBROECK ~ NORTH-HOLLAND PUBLISHING COMPANY AMStERDAM-LONDON IYIS NORTH-HOLLAND PUBLISHING COMPANY AMStERDAM.LONDON BSSO 556tS
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t v, = mmmw4t~.e^=<re.i . a..a _<ov,i.m <raai<n~.+~ P aoa v amMar o.qKi i wey .~,<. ~a t'n< t.~<t~ (w a.,<o~a t;~< i„ <oa: e .<n«t o°iY af pric<tl:vycs. nn Nmp«I ce <q;etMr nit6tM M melMirnt E messum p..rtlY <n~ ~m Ia'-~dss'ai Y a~ P%rtly tnc i„mme eHed ~w n tM <at :,r iivmg ~n:<u ~, ~ m~~m< „ w n:. .amMi< to.ra <-.-.I,a'a,+.=ii..<m.<xm~=I a.a,w f5a (.md:<i.< luwr t a<„t)., o ^~, rm< n nT..,, _ ma:4i ~t<~w~ <~P~ In(Plvl.e,~~~i(rce Temm+:ianm'r a,:.i'y:,'~R:e vunaol<"~y:.~'ae,e'ntibam: Ymiu<,.' ' roh«oprw~m.<:,,:q,ai`enYa~.i,r,:p <a~p<miwr<M tw..c.o nan„g oa<n y,.a. nr nw,i,,,owy ~' . TK aveng< p:e <om~u,<.1 in ,I way will le a weigM1tN a.mge u/ tic mt 1 ri,¢, nl ail v::::eiic AnrL:g ,i. ~J`TM1m°,M1e rcgrcssion <ceR,ci<nt ol P ni/11e an vve.age o:~n ungn^ `.,1.'.k.wn :`R`,a t„a<<K,t ,a,M~ ¢ HM1m< ~a.,.i,Y Ki~y .u i~pwta~nt ro. emp ~i unaJni..r iM .n..rnwlao1rnn.a, i:~e. u, zz5a 556T5
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I AN ECONOMETRIC MODEL OF THE TOBACCO INDUSTRY JoAv M. Vervne, Norfi<et W. Aives, Jr. aod Thomn H. t.aylor • Inwdu<aoe Fluesur<d Is praduc<d mtiuly w NorU Caro- I L p r we deu b ev e<onometric I ve, SouW Carol va, Virgiola, avd Georgia modei nf Ihe Ameri<av tobacco ivAossry fnr _ W<pcri9d 1949 Wrovgh 1966. The mod<I moav Sx.xu r,vo Pvuro Rrm, tsso-laaf ~ s 19 equvuovs avd u J,v~ded ato Wree ma. o~biocks-(1) 1<ef productiov, (3) lesf pd<e aed (I) cigar<tms. Ulumately~we Loope iousertM model m`perimm paur.y aimmadoe eaperlm<ou w ePamm< m< eEw6 0( an<mW~< gnvemmevul eva mava~ gerivl porcies eo We benavim If tb< ivavstry. w< beeiv wiW I bri<f a<xripaon of N< Ivaustrr. x<a w<aiacuss eh< WeoreYUl apai- sreaon of ine moaa aed we sutiad<,uy esti. W - malm <q ws. e ce ma< Mln smn< pm<.eured leaf mar4<4 ocee avvvauy cumpl< simvlauoo reavlrs wbi<b provid<adJi- July aod Avgmt. 'Pbe leaf is brovgbt by tne dovai evidenre af Ine validiry a1 the modet fur growers to the auuioo aarebouus. It ia snev eapLivivg the bebavlor ol tne tobecco ivdustry piattd in Bat taslt<u avd arravged iv rowa w over tb< period i9a9 tbrovgb /966. tn<av<tiw flom. RacapGov o( rhe Indu+vy Tbetabac ivdustry,as willusethet d ~ e<Ms We rndie& srl iv ttLS pacea~ mdudes th~g<ow s If flve<ured 1 If tobaa9 1 f Ibe a c' .warehuvse rystem W Wj.~ ~r ~ ~ en wh<r<ie W< ieaf is sold to We y y` ciger<tse m.ov- y' re fan ava the m vu(ecmr< aea aa of m<wmum i<ovsummam e ri: Po. . sq. a' ~ dgareret<sto the pub4c. We iguore the m u /actu of oWer The seWng aitle If tbe leaf market covsisu tubatto produ<IS. Th<re ar<.... ber ol olb<r types ol toba¢o ol a v<ry large number o1 growers.° However, Iml, <g. Burley, Marylmd, 6recured, et de buying siae is quit< di0er<ot. Tobacco wbicn we bave <kct<d to igvore.' Ovr justibu~ buyera are e1Ner rrorcsroudves o1 W<d- r<r aemt uc cigarett< r<ra or vr< bvyers 1. - ia 6.1 Bveavrcd 1ea/ u tbe most impor mavufaeev ,e ugaretrs producYOe. po< estima e hes -. Table t b Ivciuded to qive ae ivdire. placed ine average blend af ap domesuc cig- uoe ol We <evc<otratiov of tM cigvrett<mavv- Bu'tea a<9percent0uncuredend3]percent 1act~rm4vr<vuvab~berydaul0<dels olil<af ry(36, reble IS]. Teble 1 ahowa acreage b' BoP avd 1<af production lor tbe periotl 1960.196]. vistlc. A number o( studies n<,r< beee made n efiorl to d<termive tne <al<m to wlacb n<nar< tnm<ro us. zo. n n . io e;, w epom~: :.n i io . rl a y1 ...,e.. ,ne.weaal. (I<9)
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51955 OSo2 ................ u..c.mrssaw..uav.qien [ ................. ~ynwu..wrrsMx r naen on~s v ,vxatv . , oanwaev . . . .. . . vvw.wmn~w t w~ro.~fio . . ~.wv.vw.!w.wqwo.erv n . . . . .. . . . . .. . . . . . . . . .~~w mv'.~ ~[ ~ SLN3INOJ
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ECONOME]'RIC MODEL OF THE TOBACCOINDUSTRY e. p _ AL-us'D . axrf lp Iiti•,.~+p-X d 1 I rr.c...0ar _T' I point T. Ciserly, pomt r axs not Iw on me ..spxs v.tQ ~ rncrs0.s'sr.3LnT91 ' ~x,sP.ar Tbere would be vo prablem m estimetiog 0B if we had reuon to beli<ve Wet sll observable poinu a<tuelly li< ov 08. Uv/ormoat<ly, we hav<«awv to believe otberwise. I( We gov<m- bom,f bave xt tbe allmmem ror acrcage atpC scrcs ahev AVAL,-, wu OD, sbev sbe polnt observ<d in that y<ar would beve beeo acmage supply equatlov. To avuid thiz di~culty we bave emptoyed a rat<gy proposed bY Jobnsoo [11) m atudy ol the Rurley markee Rether tban atkmptivg t< A, w< es « We differevrz be- ren A aed acreage aVOtvu.vt AL Thiz dl9erv or uvderage, UND, Is We numbcr af acrm not planted eveo thovgM1 permitud by tbe ello> nt. The bypotMSUis the[ UNDwill be lowtt sbe gr<ater the ewnomic inantive 1a to growcrs. qlUtougL ]oLnsov used tbe kgged pritt ol leag u the economic bcentive varieble, we bave used s dNer<nt approacS. Belnre describing tblz apFroacL we m14ht pomt aut that thc use g ~-„e Inp,ar ,.. ccon . ccorv~rtFtPL, FE/SYI I af lagged price appean to bave tbe defat that ss. cvso . c<roa+Yx'>`k'b I be sero in year 1<od 5001a yur } even tAOUgh ' 19 6 - _ wr sssasegy u so sumst< a nypomet,ra~ I +'dTi1Eri' frcemarketacrcage,AFR,aedtvusetbeexsess 5 n s of A£R over AL u a musare of the growers' srx ra. + s+ T ~ iceevtive to reduce UND. TM1e AFA eqwtiov ~ nlal limisation. If price is multiptkd by zince tbe govnnmes^` c~t 0. 19J0 tlatn. TLUS, progr,m~ did not f y£A we obteio Ibe variabk acro-value, AVAL. go into eHect unui alter 1933, the IO-1930 Conswv<nsly, sve view the grower as poszeaz- dau poinu shovld all iie an the live OB /a ittL suGPIY function ot acruge, A, which figure 1. 01 coursq In usieg the equation we i reVponds to the lagged pri<e af ecres, w mu t make the nNer alrong assumption Uut A AL,_,. Under lree market condltiona we Wesstrurtme of supply M1u nm <haaged over ( would lik< to ~e We acrcage equation, this long period ol time. The ex«Ilent sUtisU- 1 A- )(AVAL, -). t Fm example, the liee OS ®I r<sulls /or lbese equations oNer some suµ I w figure 3 could reprezeot such ao <quatbo. port for thk assumptbu.
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<ar•ta;,: qrbJ ,v<w< o~ <o wa>«<.u~ n, a b> m<u.n e<<Jn,~<wvv)>aia.<uw ie.N„e 1 e5S 2-<lf•-vl~ ~m <o (cigarcnes, ollu< <o p<MUCx),o wned hom.cymc:~e ds<a n<cwmv nnd an~pn<n =lIXU 6.~r~ e Ps mopcdu<u. d Bawe loe consumee pe ~un ex<i ry Nspouble~ es,d<Pau ~ e ' ~r',>mususnslbe peM~iw<dal<. ,,, enna~. . < ~mo ,< vd< „m<, m <o~.~m<a <, ~. )ssz ... ~sn i~slu~._ )seaP>. ~amt=~_. n~ r~.<ar<..•ae<rm<d,e,~re,,,;)v:n<M< ir~~rJ ha m~<maoar avnta<nt
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t56 THE REVIER' OF ECONOMICS AND STAT3S'IICS cigarettes u betv.eev - 0.3 avd - o,a, avd We the mvdel fin earb period for the currcnt valms ' elsstklty vt dcmavd ebout o.5. A of tbe 19 endogevous varubin. Tbe values of dummy variabk usei to rcpreseM the t9W tbe endogenous vaiubles e<vemcA Iv o Surg n Geveral's repwt oo We link batwaen period wtte ted beck wto IDe madel ia Suto e and amoking proved to be Ivsigvlfirsm. perieds Iv the torm or lagged avdogenouz vari~ rcilu oNer e.Himeted equatiov In lbis block is abka Tbe error t<rms In We bebaviorel equa- Ne se<Lniul relatiov betweev Iw( dissppear- Uovs we auppressed. Iv Wu manoer we gco~ avd cigarmte prvductiuv. ihus, equauoo er-d We time paths (vr We 19 eedagenous 161z a regressiov o( tobarco leal per cigare[te, variabks over the period 1949 Wmugh 19ad. L£PC/G, on time. It revwLS tbat LFPCIG TMalmulaUOVSwercrunonaelBM360/i5 u declining eryvvenzially et about 3 per cevt omWter wiN the eid o1 PAOGRAM SIMU. per year. Tbe ratlo of fiue-ed leaf price to LATE-a slmWation Iaoguage developetl st Burley priu was also tried u av independevt the Unlrsrsityot Witcovs5v (or rondudwg riable, but B provod so be smlktially Ivsig~ ulativn eaperim wiW uooometric models. vifi®vt. Figure 3 Wrough g cmniv graphs of su ot la) DomesekCigme/1eCOns.myfion Fa~461es Purpvu o whsthnepath5 ~eettueltlme mparlsovs, log oN ou so log xPGG pe0s ot them su verubles arc elw plottcd. Ov (a9) tbe buis o5 Wesc gr.PMret comParlavus ur the ~ log xmsr simuleted output ol the model and sbc atual ~(no ssl me {mlbs ot ibe cerrespmding varubkt, we R' =oao9a condvdetbasourmadeldoesareuovablyaood DW = 0.5900 (ICa9-19sa) job of almulatwg ibe bebavlor o5 the abaao SE _. industry bctweev t949 end g966. [t remaiva to IS)Cigar aeP.odu< CPRO Qe30 %CCON+TXFWD ta) Lea1Pe.IUDOClgarellea vg LFPC(G= 0.616~ - o.oiB9 TIDfE (0.0156) (O.aol'/1 R' =OA53t (59a9-1966) 3£= 51) Diaappea o CiBar « P.odacsian CDIS =(LfPC/G x CPxO) t Wo IS) DvmeYi<Lea/Dimppea.anu _ +OTHD(5 19) L ai5tmk15 STA'=STR,_,+Q-DDISP_a' Simulaaovs Ia order to gain some addi~ioval Inzigbt com ning the validity ot our model we ~reated it a dosea-loo, simmsaov mnad. Thm i& fnr given star~ing values o( the lagged <ndogenous riablez and given values ot the ex .ariables evd tbe pvlicy variable r, er, we mlved Fwv¢ 5.-Ftuecuem Uxvwsc (IOb aass) Flvvu a.-S.ocas orywa-cwaTaeacm4u (tvooswv) f
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152 THE REVIEW OF ECONOMICS AND STATISTICS Time e. TxPwa r~ ba wiweawil,.ae,a. . so9~a: ~ne~..*ma srotmk, ro fbnhau agaroues) >.wPx Whol prialvdea Soura:PSCeani<R<po<lelr5e e. x Eaporu ol Iu5 Seura Aa..a R<pon ou Ta u9991ev) deaosebmw 9. vfA yk1a per sae A.m.ge eveual amoovt o5 evo- aw) N yr pmduaa per .ve. Seurce: Aawa! Repne on Tn datto Sibutkr Poliry Va.ia6/er t. AL Atlvwe / Souea: Amua Rryen en So- tv(aces) a3iaiink 1-LBDMY Dummyvariebte/mbatyvv FquaYtiot965sadeemoWa. pou„daeeProgram s. SeDMY Dummy variabl< Ser Soil B.vt Fquels 5 M 59 , 1958 avd ealhe~i,ss 5 a. SP ppo Suura: Ae,wwl Repoer w To- d(ttvu) Du,oAbutur The m0de1 cu ts ut 19 equatiom whicL A Seafp,edveriov represevt the tobecco ivdustry over Wn pe.iod The jusHfi®Bav for trntiog luf ptvduNVv 19a9-1956. Since he model is recurslve, We separatety Iram price demsmbatioo b lW! he ve eo behavio.al eqwtivvs (1, a, t0, t t,13,1a, pbaccv kaf ineekn 4 0l Ne av dmbweb type. That d 16) were estLruted by ord'mary least Is prlse aod producYOe sa not detesmived squarez.' The remavivg twelve equations are syAwuneously. Ilatber, proevcliov d<peads isdOntities. lt is covvevieo! to ronsider lhe vpoo kggad prlce ead eso be det<srnived 9rst. del Iv thsa blocks. TM first block o/ siz Sivice price depevds vpov curtent produNoq s expiaws toui lut p,oductiun avd It ran loglally 6e detemEned at4r pradudbv the eHect ot tbe evvervmrnt reslri<lioo on out- bas beeo fixed. In more ron<rete terms, loNecu p f,. The eerovd btvck, equativrs >-13, de- growers deride ov Inl psodustiou iv We Sprivg bes rhe detem.ivatiov of leaf price snd the hased upvo lhe pria «nived fvr tbe <rop iv eRett of tbe govervmevt support Drk<. The the Drettd'mg Batl. The lobscw Is eM1ev bsr. Nlyd btak, eyvatpns 1a19, ls covumed wIW ested in JWy svd August eed takev to mvket. the dgaretle manutedurin6 Pvrtiov ut ehe fv- SWCe We growers normalty Lav< n dustry. upahility, tLe lu( productioe is Wsowotvp o To illsotved userate tLe order in wbich ihe blaks !he market iv perfeclly ioeLSYC suPply (modi- must be avd to Drovide en inilial oven Red wmewhat by lhe covtml pogram). ' uf !be model, we bave mduded a fiow µre Lave fouvd It usetul to trut We average cLarl (fi8ure 1). As inditated m tAe chart, s t of leat produced pet a YPA, ss EI«ks A avd C mus! he sntved 6rst lvr We exogenorr to tbe model. Tha! 6, YPA depeuds value3 05 Q soC DDISP, end tbev blak B Iatgely vpvn weaur, techoieal rLaoge sad, may be .wlveJ fve thc remelvleg vulablese sivice 1955, YPA hes beev subjen to govem. Bars are pLred ove, pmdeteemined variahles.
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5:555 OSo3 . . . . . . ~vxJw+mD [ awa[J 9 +»Mxw+PUUJPwPmnvaaM I . . . . . . . . . w..w,an wu.ro z . . . . . . . . .. .ww~e, w~.~a.Pa.w~..~w..v i ............... w~.ro x . . . . . . . . . . . . . . . . : Nu~irv,o i v .. . . .. ... W'mp5~ : .. ..... ... ~~ ; .. NDS10:11'/vww i . . . . le'tl uqn..an vvuyw:w . . . . . . . . . . . . . . . q;~sa .......... na~wWa}iwnVNavwwY.W / .... . ... .... . .... aWdawmwm:9111JNwW c - - ~ - - ~ ~ - ~ ~ - - aPawuwe.ua:.u[J Vrorv L . . . ~. . -. . . . ~a~P.~+ ~ . .~...... ..... i . ... ...... ~`-w,~Ww w t $3"IBV1 j0 1Sf1
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51954 0565 a.WwoaW w.~...~ww.wis.wvw.u ro.~unnP<x I~ uidro run!uw.r+••o~w•nu uuuma < waaww.aiy. m~wu sa.maryD [Z uu~wg 9u~auxDV Wawos Mv,loE Ivuos' a19~ vaDR uro wo wy.+auv.v4~ swm wws wimara a. Lo~ara ivu ayi u~ 8uu~4aspv inaqv s} paq Wv suorvWo a8v.a.v ue4~ +a8uoars a.ry xu,wouow iryA nw8bm .4ar.im ~euovu0 Ivmq V i'ryrwuvE m, vnnpWp puv t J>JwEV p 8mnya.PU a4s Duv Riwa9 m&usnianDV sno9e wa,uwio al~u~ asv4 oD da414n~~ +?4sF uW wvuo0ux.4mrya4vJ v vv 9uwwnDV Wv~a+ Wu oP wo uamV w~uaD4MTaMamEb~DuaJ.yms[saonuoaa4iw'nr.>"^W 9upiiu.pv uo IuNC qunmv nllop aqi w WeuoOm~ se usai Itl .i.~idyz i iid~nvt
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a THE REVI£H' OF ECONOMICS A.\D STATISTICS 8aud opoo the hypoNesis Ihat A depeods 4) Underage upon rhe exDafed AVAL, we wn develop A U.YD = Ia.9c<0 - o.01ao AFRMAG safonniooolA,_.antlAVAL,_,(n,p.i06j. (asslal (o.aoAt) Equation I s tbe a reag< equation es ated I 58DAt{' wiN I910.19J0 data. Since it wili be v~ud k T(t ]Jitl [he modA te geverate acreages tor Ne t9a9- GBDdtI' 1966 periotl which wovld beve occorred had the Rr +(VSJ)]) free martet strucwre oi 1910.19J0 prevalled, D[ (~qc9_t966) will hel i[ We 1- marLet acreage eqva- SEV = s' a n. ihIae only otber behaviorel eqvatioe k the fir5t s'¢ ia eqvation d, the underege eque5) Achof Anecgz . We have already diuvsud the explana -L-Uh'D on for regress/ng UND an [Ae excess ol APR AL, nr APRAfAl. As hypolheaized, the 6) Lmj PradvUion coefkicot of AFRMAL'u oegalive aod is ata- C~ A X I'PA icallYSigsifirsnl . uSOwe IvrWer polat shoold bc made abou, WeUNDeqoatiw.Twodummyvariablezwere elaafPrire used to accovnt lor vnusval events a%ectin8 In equntiona >-IJ w empt to in[egrete U ND. One dummy varubk uprcaceta th< Ike govemment supponepntu for leaf into Shc Re<t ol We Soil Hant progam which was in determinatlm of pr4e. The esunre ol [hif eHe<t in 19i6, 1957, and 1958. Sincc the pro. part of tke modei Is ebat [M amoont o, kaf gram waz annoonced bo Iale in 1956 to at- pledged by growera at [he zuppo t priu, T, fen rowers' decisions, We dvmmy variabie aod [he market priu o/1ea1, PACT, are mv- SBOdfY repuseMS 195) and 1956 only. The lvallydependeat. Tlu[ is,PACTd<pmdsupoo rond dummy varubiq GBDLfY, represenls T and T depevda up0n PACT. Ne effect o(e change in nllotment nl[er planting The Sralemeat Wat T depends vpon PACT in 1965. TLe orlginal eilotmen[ wes funher eapknalion. As zuggeited by eqvires at SIS,IJS acres in December 1964. Now- )ohnson (13], we hyp0thesiee mat T depe0ds in May 1965 the ailotment waz baeaud IpOn ehe ElHerevice between SP and the hypo- 0 601,J35 acres es a result o/ ehe pzzage ot hetiul 4tt market priu, PFR. Thus, PFR [ ewrgovemmcm co [rol pragram (NS n is anelogous to APR in il nts wtut progra permits oetrot ol poundage a well Ne pria wovld have bem if licrex go mment aa acreage). rol program had not bren in <%as. Since I) FrrnMarketAneage welu d IAe paremettr esi ntrs /rom M PACf eqvation to geoerate Ihe arzificul PPR AFR=- I9[.6W]+o.9o89A_, aerks (to be deu Ted below), it Is k t64 (89.06/1) (OOrJe) ape<iel uose ebat we view T and PACT as +IO.abea7AVA4_s aimvitutovsly deurmiaed. WARe we w Id Rr = 90t5 baveprc(erredesimulU~uovsestimationofWe (19to-loso) T and PACT eqverloos, Ws wes nn[ possibk bea ol Ihe nooexisttnre afactval deta on HdsdJa PPRuse sE = J) Ane Vdue equauon, in orderatequation 10, We PACT AVaL= M X PACf ol tAe Iru merket pi~u~PFR~ Frsttlholwever, WYX need [o eaplain ehe explanatory varkbles d. 37 F.ee-Ma.kef Aneagc Lezz Allormrne A number of aludies o tovndf We lobe<co indvsery (8,11,10,}5)baveaHlhatanimporunt AFRMAL=AFR-Z varkble N ezpiakieg priu u e var66k rc~ T
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.mnrr~~Mrx ~ ~r emmr f.mn~qcmarc~rUrMm[c.NxuMn:ro-leiSe~ INtRODUCt1ON TO THE SERIFS This scsis cansisss d a numbn d hi~h<rto unpublislrW nudiez dhkh ntrodvmC by Ihc nlitun in lM1e bcM1dthal IM1cy rtpr«ms IrtsM1 wntsibusinm b cqwm'r.aien«. TM1e s<nn wrwmic analysis as uscd in iM1e ~Ilic d ~M1C aris M1as becn adopld berzu.xNwvers bo~h she adivitisof 1M1<Ilreomiixl ¢onomisl nM lM1< sm.d wosk«. AISMU~ the analytiW meshoN usnE by sM rasian <onsribvsors « IM1C vme thry a« enhdss mndisiurmd 6y th wmmon origin d she'e rtudics, namelY tM1emHint peoblens cnmum«d in pracscsl .eseemb. si«e. r« lM1u mmn. businas ryck «xnch a~d nasimW aaounting eonrch r«I: on bAilt d«onom'r pMiry, aM pmbkm d plamin~g an: sM1e mam murts d slrc aubjecb dnis witM1. lhry n«merity dA«mirc the mamrcr d sppmach adoptd by ILe avtlwsz Thcir mnM1Ods srnd tv bc'prxtinl in the smx d rws bemg too h. rmw~e Rom vppfwlion b aaval ecnmmne mMilions. In ndditian they sse avanlilelivt nlh« rbn pvalitalivc. It'esleMpedtheedRmnNasM WbC tinnvrsheunWiswill M1elp sn ssimularc Ne vdssnge drziemifc id«malion aM so rcintas« ~nwn.rmna ~np«nr m u. r u d«nnnmi«. na .rto.. 5550 355'.S
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ECONOMETRIC MODEL OF THC TOSACCO LVDVSiRY I55 bling our SQA'ET. This variabk ' the 8) RazbojNalLe°jSVDNYwDownfkD'u- uua e( Wc t0u1 z°vD1Y ol leal eveilable to aypeo.antt. Iuvgeo11ea1,ordUappearantt. Aasuch, STA,_s+QXE!-X SQNET repreuvu av ivvmtory stock ro ul<s SQNEt = ra /o rovicepL Cigarette mevufactuurs hav< DD(SP oi4e su4d iDat thry aeek m maivuin e rativ 9) Rotb vj Leal SuyD(y Lezs Esyortr te I)ir- / l i o tou avpp y o/ Iwf to <urrevr sage of °ppwraau abovt 2.5 ro I f}o]. A main r<awn /m awE _ 'ezLStDe}-Jyearagi°Breqvire- SQ= -r+Q-X t ol lohwco leaf. The numerator ol tbe ~R DD15P varkEle SQNET iz eqwl to We zum o( tDe }O) Ae/ualLeojP.ise tvcko/tebettoo°havdatWebegivvi°gotrhe vgPACT=_0.}g]] bgSQNRT muket perlod evd lea/ produ<tiw mmus p°rts a°d ndnus toha<ro pledged uvder Ne zuPPOrt program, T. 'Ihe vumeutor ts [Dw 5 log PCAPY divided by tbe currmt domeztic vsage or eo- Rs = +fODlao) ba 1 af DDfSP Th ex ec4 Wa e DW= 1.065r cve(fidmt uf rhis varvbk i° ttc PACT equa- SE = o.0a55 Owv w001 n shuuid De oega~We fs wefirmed by the irsl resutu. II) Free-ma.kw Lea1 Pr1u s The aeco°d vmiable, PCAPY, u an ivcome 1^g PPR - -O.igJJ Ivg SQ riable wDIrD aaouni5 for sbifu iv tlcmavd }R 0.5g5g vg l PCAPY n the perivA. It baz a posirive cae(fu-i<vt Note: P vufical urlrs tledvM uYVg as e~ccted. Perhaps Ne most aeriws omiuion etewnrimv ' equauev t0. Au ' ruble to accowt for W< queliiy of kaf. ruadau oa PPAdoes avr etit Uv5orluvatelY. we bv< brev wabie t0 vDUN I}) SvDDo.t Priu lszs Fru-marktt Prke ich e veruble. TDe derivation of PER iwm equatiov 10 b SPMPP=SP-PfR uceif ~ Ded bY settivR vIX Inlervevm8 o iv T~r }5) Leal P(edged wdw Su Pre 0 `owmme°t iDe DDort gram merket, ul Pledgn of kz( will be ie 1og t=10.10609)+(OAJSi)SPHPP Hcnce, eqvatiw il is i ly equetiov 50 wirb Rs T set equel to uro. PFR is niwaya ieu Ouv PACT, (ICa> Sode) as eipesled. SE e OeJ9J Eqvativv 15/s 3e T eqvatbn. The goodnen- ol-fit oi tbb eqwYO°, as mwsured by tbe co- C ~ elfi<ient o/ dekrmivetioq is pwrer lhan lor ~°' }a the demavd /wdiw for anY of Uu oWn cquatio°a. However, tbe re- ,~Y0b0° is gre5zivv weBdevt u or the eapected .ige. avd ugarctus. I° Wew oi We °llgopu4nk prideg ' lullysig°ifirml Weabwtdats°mev- b°Davorofdzecigarciumavufacturnsitscemz on rDat i° w/ina/ing thc eqv°tkv e v°lue of zOa°Bhk tH uke tDea ta PFR wn uxd whkh diflera atigb0y frnm Ibe ~ D w parr ol tbe model wbkD we eaped t° im PFR giwn iv eqvauw 11, The "adjus4d" praw 1- by PER vud wss deterMoed by fint ulcukting °dding equarlws and perbaps by uwti°g pri<e . predicied digenttbetween PACT avd PER °z evdogevour h year by wbtw<rivg eqwtiov 1 t Swm TDe demaod fuaclt°n d'uplays Dropcrties <y, each ano° lo. rhea, me vredia<d ditt<re°a simiLr tozDOU whkL have been obuived byzubtraned Irom ehe observed market D*lu n vumbcr oi ozDer ivwstigators. Far emmpie, maobuin "adjusted" PFR, iDe priu <lastlcity ol demevd lor cigar<ues 4 - oA3 avd the income etulidly An }) Leaj Prodvnivv Lesz Leaj Pkdge6 wrdi°g te Sackrw [}I], oWer awlyses havc QNET o Q-T sbow° tbat We priu e}vtidty oi dema°d f°r p
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INTRODUCTION: ISSUFS AND PRO8LEM5 1.1 Inemdu<r~on on busin<a fimas speM manry w pcmadc p[rnlial <ualomers to buY their produtta Advenui-hik only one mmponm[ dxuch atll. ing costt u en impwtsnt part of Ihc'markning min' for many frma! R is a higbly wntrorersial avbjen, morc data arc svailabk m R then olha xlling npmdi[u end il is a subnantul Renion IX Gross Na-l Pradu.v'n~ devdol~ counvinx b•or [Lac rmm~i [he nWy gocuus w advenising [o th< ndusion (ezttyl in aomc Ibwrcli®1 d'scvssio~u( M Mha mnrkping boh. Aaording b Prin[ni s Ink $166 dViwr vu ryml on advnlisiig in Ih US in 1966, abool3.Y/, of <urrenl duRar ONP ar Jb% o(wrcenl dal/ar wnvmqion upvMimrc.r Tbis Iat<a pncmdge baa b[mnabk vc Ihe pusc rornly ynns ToW rpmding in 1965, brekm doan by mM'v by Prini<r'a Ink.'n shoan in labk LI. The brokdn.m bGSn loml ad.MiainR dnrc mainly by reuikrs, aM wlhrnl ad.mising, do~e emMy by na[iaw mannfMV.ac also aPpean. Adrenising AgS vaing di&rnnl alimslion mellwda Plam aggegat< US adreniairg eayeodimra m 1966 as $168 billion • Tbry alrribvl< tNs [aat to the .anow xdon o1/M monomY aa sMwn in 46k t3. weDeylel195[.G>rfl0.a"Mno.Iaf Men~na rt ~.n21Ml.5sv.yIls6Ak.emiqbeNiM~Minyan enWoreJ. ~ 6950 >C6L5
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. . . aw..Wkmw/v'iswassa. ~ ~f'nnw.~a.aw~Wiba. ro- rvHnw.o~-ro/us>+ua~~kpvV W aoww.+w! u W n.w V w 4ua uV v?~ a!rs!w• a!u V~~ aw~ •77 r/ M W,,.9.bw! wuvPoM w ~.w u a!PVrs .q ~mN.?a~ 4.v mNC w• V.!f wla w L ~ 0 0>D`0'0 5:954 0579 ns w. 9re!nn A b e.%w s~e!oa ,q We ao!:ea>m~ o b,ny mW~ vo4e sxxaE aq ,ey, +oP p n'auxsod 4roy ve Wl.7A We `i ~!s ~n•q (b•=) w, e! sw..ao eaao!. mV) o= mlbP >res a~u. way, a.aw, o, .aa, a y .~a,eu. ,.wnao w, •wme. FIVY!4 vow ve nlrs m4• a!n>'v wWexa ay~ s! uv1 mon w/.bP vilZl,oumwnmu.au!uuryap o,16rn m, w,mm, mun!M,ui w~'WO>x w, ya,es (a•.bb we 1, d•rl.b niz n^!,!.oarew nwey> s!v, ol r!PUaJOe w, nl 'nP/.bP N~bp ws sw W/bPdY9 Z) wai .bP`'i/ = bp Owv0 0=D 1° w,+yuxlN.nu•w4~• a'i'~..aWamy !i ~1 aN,ei elm!nippn! aowuvy Is iwe e w Yu>„ sWw pe'?wV.Wi w uuoJ z!y~ W W>i .l) Wv ~11Wwel svmu>a)e,~ >y~ Sln() a~ w1W.aIPMn v. s!,I °,D/DP _,D/np iwuJ iy~ ~eV~ Mnu, a.v4 aM -i Z vniV w uau4s se sn4~ s! brzl wo„ a..y>»'>ue!a!b'n) w~ w o= d=~PidP>w w, anolv o =,P/vp awl w, auole a.~~e8au w!,w b W Wiu+ 4!..x u,o v.!,>P W! 1>!+s u svsym0aw ay! p wo !a We 0 1 mJ We 0 5°O !e41 rou4s W Ssea V il'w,uW ~>la v a q sa>JSa, 4R~ /[Rl)o ap!s W eyiy8!, ay!lo a..!!e.uaD ayy ([Zz) Y°J-d)-1'i-p u n)e uoi~ow )o uoi~enba aya }>) uo!ypuw wo,i anMUn n.(8vurs,eys ~ey,.xoys >w '+wvry 'pw >"oye NHe) sua!,Ww )o Ye o4s~ies wy! .(8vuu noP v>VS !e41 wnV»M'd We Y p Glno uo!iwn, e v.b !e4! smoilol ~eym w a.n Yluyduus ,oi -a iwplu sW>dap .D n>`Im 4o>L!P wnC n(aH>) suon~puw ,o s~s.Geue Ivawap ~i»u!s aW%oy ~v!enEaW w! M auo,sn! ie 4Va'o E O0J Wreoi i'sSWyi,wio5uowevnn/sa,y'PWJS!ircs!uws-puw.w,4! .~IGI Z.lonl,o wml nw~xew a vnsua /aHvl auwiiPnm w.yi w.o4s >y sMWvvdWeV'brv• un,sn n) 'l[VZIW wnuex~w e Ivu9u s>el w 1>Mqus'w!l~Mm>!uV! ',>VUni tall>I auaupuw iw.(ul~ ~~iDuo aa>y~ , . laa. W xvuanMUn pu v v! a ay~ v i _~ w
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PREFACE Thn vtudy n tonttrn<d nilx tM1C impaH uf advcnlsing on w.mtt heM1avioraM markn p<rformana, l1 unirying Ib<mc is tM1ar adv<nising <aprnditurz uH bc rrosea as m maugmous vafiaFk c any invalige- on d iu dfena. aM Ihm ik. a<mrminm4 musl b<cxpli<itry consNrnal. AncaurvryingrM1ewnrkorom<n aM <atmd'm6 a m variniaairMions, rbc smay arip ru<ee Mg.rx con<waims: merc la amy s mol<xin nf xab <viamtt bcxim rx< mm~nnm or pro~ on m< auxitt+ or advmising. This book ia besed on my dMOral dissttulion, On txe Eeonamia of Adv<rrnin& wM1kx was /u~nlcd ro tlrc Ocfanmmr of Econania. Massa<M1Umis InstitHC of TttM1noksgy in January. 1910. The diuer- nv<ly r<visN ard vansrmmN inro a book al Ihc Un v<rsity dCalirani; $an Digo. my grcHert debt m Fnnklin M. Fisxm, vlw rupervrmd my dissmasion. H's <lur aM in ~coom. d bah mnlrnr end pr<smtafion ,~d his many Hr6gnnnns thav< faiW thc kvd or thls study considmbly. Tbc Hhc m<mbm dmy shaecommina. Morris A Addmm aN Evsry D. Domar, wac atn quire xdpfW aM contn- bH<d manY ivigMz aM Mms. I am funh<r vM<M<a to Gwfgc H. Hainq Dak W. /ofgrnsm, Paul W. MarAvoy,H. Mi<had Manry loxn M. VmroR ana an anonymow rH for uufW wmmmts aM to DrvH Wi/koGky d tx< Columbis &aadmxing Syst<m, HHOM E. Sdnpon dOe Tckvbion Rurou dAavenieinF. uq J. C. Muweil, Jr. d OppenM1eimnk Co. fm sane d rM1e daN ud xerein. . Mostdthcrompulatb~Hp<HmmMmtxecaur:dtx'sworkwttc . doircHMRanagrnerouilYfmanwdbylxc0epanmrntdEmmm~ica. 1. PM1iil'q Cooper, John Hill aM Robut Rebdb MJpad wirh wmpu- - rww prewmH ax<re. compmc work amsc H ucsD wac rmrad by fxe A®demc Senau Comminac w Ramr A d thet univasry. 1 xm fna<- rar <hecrm1 aM s Lrul rypins m Eu Ramm~ur ana Eusan Rrooke H MIT aM lo Mad<m Moyes aM /ari< NiryMnki al UCSD. 51<ph<n L Magicsa cRrtlmdY pr<parca tM auxj<n IMca. I m my wife lasl only F<vua txH e 6. Indision m lisu of IM1is son. Dlatt M1az nd only MI up wnM1 me during txe courx of Ihn bH sx< xas IYp<d keypunchcQ proofread, aM very skilifully sfudyI MisM.SM1eelarg<lyrnponsiblcrmsuchr<adabiliryastbct<Hposscm. 1 dcdiml<txis book lo xer in grateful apprwiation. fo JoRo. Carijomia R~w.no SCSwaurarp Augu.l.l9)I uso nse~s k
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nm rrm, do nm m mk mr,Jn. .~in m u ryuiFkvtor L:1!/ M v Il.,in /,1/1 a,nJ >sRl TFC mnJiiinns onJ<. wM1icn /sl}1 n srcaier ilun ihne y ~n~areducc~n )rlJl>Zrll/el-v~E_;Jr.~1Jw-JJ>1 ZslJl > ZA2) ~ (3~~`[2E - i~ LLL' ~bw -_ ?J > i. Fe Ihird rcrm in sne fvn condi4on r» b: made ss Wge ss aesired by meFing sV az<lo.a so one ss n<eaed./Rwll ~MS sM1's means makisg e mall l go we k:wa shas sFere alsyz aisss a W soch Ihs ~be frsl gnaeis aiiud. TFe sacond wMaion a mus shc more ra~sinis<. The slnra sesm inere rdes a msvimum d: wben W goes so au RxWing thm E n be grw om ta nopoly equilibnum, we mun sx d ~nerc e.ins aneE grcarer tnan one sucF shat R a HI .crlE-',lI ..: > ir L2 E Thc c.prcssiw on 11111 ` ixpuainy nas s raluc d j whm E= 1. The ebnicity d R wnn rcs~ m E is Tns csprcssbn ®n bssnown io besMyspositiw 6r E> I byeva in8 tne f- scrm in tne gemral uria apension W ~M1C bgraisnm It dN:nes from IM~ io xro u E goex 4om oiu so mfrniry. Thus Ealways wibE. Teking bgaritnms aM applyi~ 1'HOpilaMS ruk, w< Grd snal tha limil d R ss E bttoma very 4rgc ia eaP Ilnfi) Thus as bng as L85C 656t5 wmch implim mai a - n< ta,. m.a aF:,n im. mrrc .in al.ay. a~ E• aoJ: - Lsr n, I: nM.t F.'. ~Ma (vn.. wi11:J.enee m To gi.x an oampk. for n= IIS. 1. csl-i va/ue d E snms ~o be mr R.c. li wonld a es fm nabk valun d n ard E. adrertisin8 would mcn itsnpu4 in sniv model for oM m two frtms.
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+ol nuunpm, Sa^s p awew+oYad ay, w ,wwa8pn,( mW ol!p~ulll!P y 11 'vuywww qleayn,lodouwu YC[dl/ w,l+>4wey~ 8u!moliol'Wm+» Rllens^ ae (iw>J Jo .>qwnu a8re1 e puv •[+wa a,l ts+npo,J pose!su»ay!P 41!x/ s+os z~yl lo w+lmpul uu^q yosuaww qY 11. u!esqo q^om a4 •u FeJ w 8u!Ipu auro Fa41 suoza n.zaleym ~ 9u!qua,ve +oJ FeJ ol au!Ip.. a,am e,awok^, mmmaw ay, {oqzaa »ua+aL!P WI JI eumluepe s,nisel a411o wnowe ayl .(q PooB P>zq ,anPe ay1 W nNJ ayl ueyl+aazol aq Pinam av,J>zW. nnPwJ Pai»a. qeu^ uq lo!wP! ue 4Pro nj+ew a41 nlw q~wro auoawoc 7a>w an4111 a+u^pm pv wu! 4wa awl p p+m e u euu!!sa..p.+ano o^ >4 w^w awl ,w> A 1! vlon 1 m~a^.y> aua wl ,oJ mq Ponew ~+olu! p wms v m pu 9mvywpa Nn s,awsuuw ley, sa^&e auo ua4+s uu3'w++o> Fllo!seq vuax uwiwmw y4a tao8 p se.el sy 'pupnw 8umwnpv ulaa ayl ,ol <vJ ol8mpw a>e vaw^zuo> owe ay1 pavu wuuea qaoo8 pauwnpe pue asayl ~nyaq Inw»al ,p,p »uJ ayl'uyew awes ays m, >Iqel!e.e spoo8 pau,!+vpe [IIYe!1 w pau,luzpeun »e >+ayl ea 8uol m}ayl wz8,e raNl'uo!PPPe ui qon. w .enev Kaz~W •I wzWua>„ ' isvulaysy'm8mnwbuu~yanpe +ol uM+aw a,ueJas v ypa leq aq p^om uwp^poW w!ofp sa~mouo>a 8u!tuea q»J aH 9u!urne» siyl woy swass!P (q961 bH61/ +'r+l>1 uuolu!e>^pod+olled w8u!neyppea sa!1!poww paz!»a.zps +ol s»ud u48!4 48^0 41 uawmuoa os luo pnseJ a 8w, u»pelolsway~'aW oans~euanapuewappnorouawnsuwue4~ Hwz'1u.pe oa FIJJns >u^po+J Jo ayl u Fpen 1e41HU!lels~s!41 4s!m paa+8e 19y61/ nwa15 paanpo>J's! Yu!nu>npe 4>nw 41 WnB,e ,uPIeM '~ +oJ F auawllim niPui Fn>a,!pw !zpe~ ~p^e,yros pavdJ^. a P Mp. «4 >r,eY eloi>~q 4u J J. nPa,>P!z, >>I!wouov'/IK6/J,oNJM 51955 0566 e+>W+++w •o.. a. e~e» .. wrMwww,xwwaiuw!irst rt~~~~YSa~l+u++~p•.....e. 4Pm 8wuu®ag 1eb9611*^O Fq Wla+,^s se -puadz 8^rs-•pe Ja mqlo!Idw! zel1am ayl qPm yeaP »e4 sl . u [^ely (Z) ~',ayV^lsa8es - Pe lo uoyewawJ ,o awy.> v.lz sswvp pu vop Sp^Is s!41 'FpuaMasuo~ tnul^J4~^,i p sryepuels 8u!ys!pe~m ue4~ ,a4~o V!4uosua F+e+pq+e Fluesm»ulo yoyz tuoy^Im s^ouqo ou sis>88^s s!s/leue .>!wouov w8 Pooa >!Wnd e p sa!NUanneya w se4 eipaw ayl w, 8wn»aPe mys paweow ay PI^^4s P pue taozlo (yleu m p>p+e8v aq .(ew aldoaJ awos puaLO ,o Fouoe suwsnap +N4laleyt Pel >41 sla8pn9 8ws!uanpe wn91o sales uo ueJw~ ay os m8ezsw a!aY+s amW zw+y.(ryew svoz ssayl p m~ i as>iwl »n9uwoa un s~~wouwa asu~rodJo %11 XC e9 zu %AY ea,upoo8 oN oa II»s!W sawd sasea+>u! euuy+anptl za+d Y8!Is pe9>o an!zwUO s4^*W 'FII!S e,aase. rvn »nl anqJn„ wl'<>uanW,l'sunowe asa w/ se~8u~ +anpe 8m;4ap,o1 z'uosea+p umoPHeaN e~imollol ul~ P>PI>!< A^+^s aJ9Y8'I tl e a.Pe n.vuzNlo ,1»fqo8ws anpeaq4lou>oPWmrydoaJ m8w ~.(ou _ ~ a ~ a.pe as lo d pue W w ayl / i/ . . ,I. !ew a4~ ve 8u mo11^I>41 dN4 Plnoyz ~eyl s sanb'I>eJ Jo s>nDsu zPUaJapzw xa411olowloz+awu~y~vea(ayl,a. a.pe ~ we8e . ~. > p -. e pala.al a. 4 vayw p- 1! .1 I > ~~w „ 1 rv ,>p~ ., a l >y. n lo zwy> >~
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,~ rar<a m<rvom<m nr W,,,,:ing rM Jm<.pan.. nr A ann / sn .n m maaor,ne rM m<sem voluc n/ J,c urenm p ns. s n<for<, rM rc m dem M1all wlrc rhis prnm<m n.ins rha mrM1niwtt<or moa<m opdmal ronrrol meory.° U<fn<rM currem-valuc Nsmilronien Ve(VQ-nQ)-ATji".l~"/LF(Q•.Q/} (2181 The dual rariab4 a may he inurpr<ud m lM increase in she prvem value ot profss tlue ro an incrcnu in sals.'• Nveuary mndirions fer a Izn/ r<v < m.r m<« a s n w,x wmrnpopa fimcaons Alsl and %rl aocM1 sner Alrl m (bl %H maa,mrtta H ar all pa,ns ii z"2ll (</ a (a.-.7 = _ aQ. la) lim a.-" = a. 1<I IimQae "=0. We frrsr considcr<onditians (a/ arM (b). Selring lne parba/ d<rivativcs or H wirh r<spva ro P end A eQoal lo xro, w< obuin Q+aT,Q•a=0 Is is <asy m sM1Ow rM1at lMU equasiom Indinu a maximum of H if F[QyA,P,rI, 91 is everywM1erc a conove forrdion af A aM P, and we erh/smrWhio risfrcd. asln both of wndiriom (219A tn< frrsl lmn'n rn<tlxngc in prmnl pmfrrs docdireqly so a unir incruu in tlrcwnrrol rarieb4. TM xcond n«rttt< on prnru s'.a <nanges in prarnl aaks w_ ar shc shadowrpritt x Thus tnex andiliom rcquirc s<salianary poinr in rM putd valnc of the firm m a fuenion of currrnr A aM P. .Ilmh I«..b... nrarinria. ar rx. rx eryron w xo Ir~r wi A,m. pfbet o• _ vl•1 Q~', and E' _ - Ir wc aiminarc aF~ 4om ca. rzw...c onr.nn Il w<JCfnc sr JcmanJ wun ressecr n, aJvv r g ga ane ~tl«.. rwn.:. cq.(22o1bcwmarM1<surprisingr<sun (211) uar M1oW n al/ pims alang an oprimal pmM1, rcgardkss onM wni<vhr mrm nr %a or or nnw Q• raria wim r. If slrc lo~g-rv elas n(221, are wmr nr neisM1er clron~ mthei n M1epixafadve ningrm~a will hav<cany imlpatt on r1u dollar adver[ising-0ollaf sal<s rario. W< rnos have tM1C Dorfman-Sleinv lormWe .gain, m¢In tMr we disringuisn b<swun slron, aM long-run clas ns. W<also have rong Lelenx fm policis inrolvirrg comtam adv«rising-saks resiei a Fq. (2211 dom nM rcduu m anY casc b shc NMOrt-Arrow cquili~ briom rtlasion~2gA t1u fundamrnW diRCrcns.risa 6cuux vrc lurt numed shal all aemaMdnttminir,g variables have tM ssrnc dyvmie mpan. Thu fosmvlelion is m arcoM with mav empirinl dclermina- som d disrribnd Isg medvnivnz ll sMOU/d bc emphasi~ snal lnc palns of rha dvision and srau riabtaartmrirM<pendentoflirrcmMinriil<ondisbns.<venthnugM1 rM1e edvcnising-saka nlio ma9 be Wc can rc wr,k <qx (2.191 in lhc fdlowingform: (2t9) = aF, E'Q•lQ A-aF a•Q• (2.22/ From lM1<x <9oasiom ir snoWd R c4ar rM1sr bosn pncin8 and edmtis- ing a«iaom ert /nllu<ncM by dynamic wnsid<rarinna Ir is thc bd snal rM1ry a« hmh m inlloencaf rnar gires i,x ro rne simple (orm af W214 So far, we luve eaaminM praicrrics of A(rA %t) pairs which sati4y mnd'niom (a/ eM (b). To mmpMc om analysis of this proNmt we BLSO t56:;
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al'ZI 'lY-(ap-aA=1,111 se I~uaqtvwlaPOws.ylwlJwdlouWayy suoydwnsn sno~.qo 8w.wllol ays aryw aM Y01'Z) ssasma le»ua8 ayl [q wssi A b w uo!ww lo ununM ayl leyl uoudwnae ay, .',PUn 8uwuaepe HoEOUOw lesu Wo vHeue law aM Io1ZI '[OlbYsl,b7i=Ils~ sewu. uoqunn4l'auolono o/llanVwxwrmnaylui ICI'il IUYs1,b1y.I=ll~p . u!q4o arc •, os Wdsa, yy+41b sol a"oqa 6Nlnpuuw! uaso>du ayl8uynsua,ay!p 'UZMWe, Ile,ol'{sD[z-,'MIymI}I=k IZI'ZI 41~m 'i,P[+-,'f,l.a]4 ( }1=1i1a ll( smollol sa (il'Z18u!eywaua8 Rq .(,uuwy lo uaµ,ua, ayl do,p Pue vun,uwow!1 u~elw a,H walz<e w. . ~'aeauqlemoellovawdw,eynqsPUOAv,mAyt /ili/ 1=+W'WI yl~+''P4-,141s/,bf=VID s '[Ilew,oj/l>lyly8u.r.a8w..ey v-,La ylw',a,o nu/e. ryeJ uep a8uau P>14a.uw e A Olb Iw18u! .wes:e sv Wwxlyo A,w~l.ww,e, lene>a a,ow vaww'=nrvo.lss e p12/ ,a-.alr=bc >y Pl~wm wswuyaaw wawi.Npv 5_959 05"/' . ww.p wew u[/ ~ uw~. u uw ww~tp.uuy~i.mi~iraew,!~„w 9umurspv lud [q Imf lou tewmu! pus sa1W ueG .t9 pwluwup A vnpmd e lo ry!+Pooe a41 leyl u!saywd.(4 a'a •1>0l. 11!+PuoBNsuuas ul xlpey 8w8eaWJO qsm'aPUeyap wsmp arvuaq puewap wnuq!pnha ol rynba Hi~ lou A PuewaP lenntl'saw!1 pe u.D sWa.ol a..au 'b'Wewap u"nv b e•Yl.a =.a <4 uave PuewaP wnlaqi!nE> ue s~ wyl aw!I lo luawow 4>sa le Ivyl awnue x.aary-a^o1nN „11 uryi ylo. Inuldsw Wva, 41!m P>w>e u~wow %~ewvP uw~uuw W IaWu~ e aM^wsul mou aM uuryosd>yl Wnodwmsapnu 8uun,anpe uow m woP>uJ P s».BaP uo suwlw!w!~ .i wAUryvw 8e1 Wsnqump wa,all!p e yi- alqNe. w>WaWP a41 uo awaopul apauen Impuedapul luws p yxn yvym u a, ~ w.cs® loo wpsoaow >~ s. •,ayuei~ u.15961) mIILL Wu~ay„eywoyl oP'a+ueuw ,al ze ~ISOwwul Ayl smollol e,aMeya u! pwn4u>w aso.e lea!>!dlua ays lo yv aowly s La ?wvu.(p a.ey apu,u uwsuaD Jo Aval Wamp ayl w,uuaup ,vyl aYwvnb Ile snyy :l>,.ry pw~sap na410l .Ipenpe,9npeuurwpuap,uylpn(pespleyxnoy,osw,Jleysswnsse nuasoW wawlz^.We>!weu(P 8s!WO.u! y,om>uWwuo» uoW 9upu u.Pe p[IadmJ Wvayw awoslo snm>q wy'uulWwnszv lewn ry, m ~o xnoa4 wu w,e auls!1,>npe lo sp>ya mweuRp ayy sxeyasm/ ww~u WLe al pa.uolle ve »wu>u! Ked ,ou 'm!M uW ,ou azeyvnd ued uywN'aEUe,ls zw>s poo7.(q pue umsy pue anoWN 69 P~nssa niweu4P WewaP >Ppww[se ays'Hlrvld z~ 4° A aea lau>ds HBwpwxa ayl w Wnva sape..nsqa~o.(wo uo!wnl v/11Y uyew ol se Sem e y>ns u1/52) pue1,8Z)Y.Silz~ae'!qwmo,Ay!ssWw!eu weuumawos>ol 1621 III -,/S -I,I,S7~ ° /1 ' "S - I/IS o~ aulp~nw y~u ni,qil!nW sWemw Hrnpua p>.u s! ywlz Iunue n> a z>les W y Puv wz~ww z! y•;.ws Ipmpa,a /uw.l .,Sua y LNZI emaM°Ine' >..ey am ua41. IY ZI w waa~w> >,~ . Dux 3 .L -4- asv.> n>I~wis ayl ,aWSUOJ "1>pow
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THE ADVERTISING EXPENDITURE DECISION . IrrrrMunirrn zM1ap srigate IM1< dae a 6 spmding aMdaBycim<rrned in rh< nnwairzcirzc.s of advenin or salm vomm< on advv. a<ifM1rm <adve nngovriays saks,zheaimuRan MoblemrN<rtetlwinchap Ianaesmazr<mMSOmeeswe s o( advenising on d<mand.r< rbSecimrn 2.E revicwz empiriwl nudies M M1ow buxincezes dezide M1ow mucn io adv<nise, arM e<mnllY <on<ludcs from IM1me inresrigefivnz inar .:alxa vm < "m a<r<,min m or aor< ns bnag<u. n anmber ar,uuM1m w mar nueco rnln <rts~. ana nrm<ayna c or aver s m <alarg<rwc n ~or < <eanrcmris a<rol<d m r<nigns x<e.r •.i~< nzJw nxiara vmxr~orpaxl r<iar<m< n<;a< ~rm am<nis~g in w inamlrim mam< maraa<risliw or rhe Modvcrs inrolvM. Th<ae r<II onlY Mrt of th< norY. mm~<v<r, as rne r n of nc~ cbaMm xhow a adre ne sperMin6 is delermirud bY mor< IFan lv.a rls< <IfrwcY of zh<s< ornkYa. Scaions 2<.26 tlisma. zh< litm~urc on opiimal adrcnising by anopolizr aM derebp e new madel rw rM1is aecizivn. Se<riom E] and Z% rake vp zh< pmbkm of adv<nising outlays urMer oli8qroly, aM rhe <hapzn <nds wiln a bi<f s<z Mwndusiom and g<m.reliarions. Ail of ow rncorcrirel work ma4n zhe simplifying essuminion Ihal IM1e mpons of sal<s ro edvmirin8 k zvruin. $rs Horowilz (19NI for a ex0lorazion o! zM1<mnsryuences of unwnainry in zh'n wnl<a, <, t'nver m at l l. <ing nnJ xalcv farr Chiwko Jmarlm<nr nurcc llr y r..un~irlmt sm~mnul andreycliwl v ¢rN in ndvc sing. <s 119G// m ncaj rm imy o nrM1ly x rtt fon c, Mriad 192J.19J9. Thc Prinler1a Ink inden of adv<nisin6 xprnJine wax fnund wiln F<d<fal R<scrrc Poard ind<a or irMUSlrial Modvciion. Tum ne poims In rhe aav<nisin6 uria 8cncmllY followcd rho.c in Ihr FRB iM« by ttro lo<igM momnz. D<lailra <aaminarion vfdmnrr. amobiln aM cigarclza IW lo znc mn<ivsion Ihaf advttlising also zalwnd<a to wls in zhcs<irqmtria wi1M1 similar IaB. BoNrn (19<2 d. 251 prczenrcd <vidcna from surr<YS lakw in zM1e 19Jtls. Of 315 lafg< Brmx qu<xriurrcd S1% :urM 0.1 mar appfo- a prcdercrminca Mmnragc or wk., cithcr of nc~ Msr arnd rM1e year of sM1e budger. Amm~cr 16%w<re guiaml in ryn hy w<la rcnzed Brapniwl cvid<me rhal agg cga adver e Irs e diru r<a wirh Inc box Ycl<. ln19d9, Mn !as am (19<9a) publixnM I/r< rca z o/ sv .<YS lakm rne 19- wlrrcM1 sMw<d )Sy, of lazge Brms osing a ylanxd advn~ 6-P/+nn<d ais razio in daimm-making. Adverlising was Ihen aainxma xom<wn,ar orm n m<Manmd m.nm xncs d<pan<a Bom <apedarions. Thc ]5%rfgurc was found by svrreys rakrn in /9N/. 1131 ard 19J]. Evrn in zM1< zurbulmz year o! 19)J,62% of rrmx an<ried ssie zhey rWlow<d mis proadarc. Tm ynrs laler, Tad'm (1959) dittuxsel zh rcsvlb d a nvmbn of ind<qn Inlcrviews wilh mark<lin8 wccv1iv<x in sM1<Uniz<d Kingdom H< rwrna tl. sa ma<nanam prcraning mar nnram d<aabm. rhougn managers .I» mmfiomd zne inlluena of Producl 'Me<ysk conaia<rariom. In yq anolMf surv<y, Bvllm (196H round 60°/ ot iMUSrrial Nrcn sing n Mmmtag<or nkz rul< in 1960. s Yang(19631ena81ank(1963/aimlya<dyvan<rlYligurarora8grcgaze adve sing <ap<nd n m m<die. Th<y rovnd tbal aavenising morM wirn sM1C busi csscycl<, bur laggcd Fvsincss amiriry es Ibs Ivming /winss. We anelyz< <.~rnsons or Blank's ttrin in ~Ae at chaper and mmc so yesiwlly Inc aemc carxlusions. n<EinaBy. M<Irosc (1969/ azz<mind lo wplain zhc adrcrtising omlayx of Ihe Lydia Pinknam MWicine compeny using rcgresxinn evuations ZGCa b56L5
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aeNla nicn:h<cR«I :aldemau+l<I< < [X:er vof eJv< Nvs gnAROry, nrdenJ:hcq,cnammnNavtt ~niM,ca ml, wmMn mwd. rn< e al cm imlo: a m< <.vk„a oe xna Ihc Ineort eai a suRRal mv ur. u« wmm aJ.<rr a„s aMaiaa is a mm garaaras< ar vkse Cnap er Jcis emqrical invesligalloa d 9var~edy n nal adv< g spending n Inc U5. w' ow Ihat eggr<garc advc ning don aRM aggrcgalc consumqionasprnding Nalional adecnisiry ovllays qai- d by an epvalion indimting Inal tnc ncadY+tatc nt/u or nal adverlisine to Ine sds af wnsuma gwds vanc oniy slightly M1c bu.nncss cydc. W<(md that anusl advcnising vdjvss raMdly voequJeSrium Ievelz aM invwigatiore ofspe:ding in i,divWual medu wnfmm ihh Iwncm. Thc f ini4rena from Ihc.a raulls is Inal riaN- cmlag<-orsaln dc<ision ruks vrc indeed rid<ty uud. The seroM is IFa~ adjuslm<m o! adual m dsired admtising occurs so ra~idiy Ihet nual dwa in dcmand atima~ion runs a grrzr nrk of rnwunlcr- i„R thc id<mifmliov Mobkm disussM in Ilrc 4st astion. Iv chaqm < w ically wrvry qevqm uWies of Mvcnisinga and r aal<a, moa a wnid, ra nl wr iv ~„sa<R, ruba„dnoncafwhicFar vhonysvnmfuf rn< nyw- abow aaKniainea artma on aak. wnich na.< bacn suggcsrW arc rnnakercd, bw we mndude Ihat r:o positive stal<mema abom ~Ae eP<ctv ot advvtising m dsmu,d nr, be maae on Ihe bacis M th< exisling litttaturc Thc nen twro chaM<rs repon a nudy oI sdv<n'uinga imyan un olal cigarqle saks in Ihe US aM on rne sals oreach of the sia malor I,roduttrv A mvllan<ous cqvations esl or, dcsignd w oMaia a of e<mand wram e prcttnrM arM <mploycd, alongnrnh .,!n4k eqvation menni9vanln s0ile M wnsdttabk eRort, truly rdubk a1imatn arc oMaiircd, and the rmsnns ror, nM imMi- om oC th's failurc arc <apbrcd. Thc rsuhs do suggcst, thovgh tnal lnc impan of edvenising on purduxa ordgaMtq eithc in totel or frmn indindual hsms, is ksc Ihan qpviady aaumed. FivilI chaM<r'/ aCVhrs 1hc Orcvious work b an unporunt cmpin ial question: the impsst of advcnising on tn< abiliry of f,rms asM inaandtt to<.m monoooy qosla w<arg,rcmat a-aron tdw«n ae.<niains inmoaity .na qoswaar is m x< <aon.vea <r<n „, m< aha,a Ma caumi nuw from adve,nsins Iv rrorv,. FuAv.e it n 9wwn vidcn <s .,,h+: vdv< rhim, lul :dvtt ning c ncdwahk MN rcmchngalhN ua n rn~Y burr <,httcfurt Jc ihel otxing fs really Rnown abaw Ine imran a( adv<nising nn mar,olwly ~la SaAly, mon of our cundvaions art ncgatire. Mus or IM1c iminrlam faduilyueslionsdiseuuN in xttlion 12ebove, M1arc ycl lo be encw<rd. 1 dW nM start ow ~o wri¢ sud, a negative boak. As any rrwrcher, 1 originally nohm lo esleM the bo,mdariesdknowledge.ln procreding ward what I IlwugM wcre IM1<bounaarict Ihough, n bcamcapMrem Ihs tM meps al my d:qwsal roa fauxy Tcrritory Inal wu avM,osedly within the bovMaria ot knowiedge nad na becn com.nly mapped. Ifoo<r„nr mia nwr - m inakasas rim aom< Mttiairn wn<,< unkno s lic a,M in oviding rwu some id® of tM1e ebsladn likely Io b<encavnlerN in altm,' Ms lo map IM1em. ~LSO 5$6i~
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AI'I'I:NI)I% . <Iqmgrlrelrr.r-nrJCrarmdiiirrrrra.wrrrirnahrvcweF:rve n.q:rlBnrM.rieirmll JQ ~ Irwre<fne d, r ,f-2c,rTQ-'.nQ'- r.r=~. qn.r.r.Qr = r[Q'In,r.n.Q1. mrWirieas 12.19/raa bc r< wmrca as Q+eGr=O, -TaaG,r=0. 1'he .emaJrordrr ondili rar D s c. Ry as umMio F~ r atm c The ofrlFe Jm os rhe si af the qoa n bracka wlirch wc sMll rcfer ro as W. FunM1tt m loying Ihe ttaondorda mndilions, wc dcfn< X=--CIAQ'>D, md Y Tb< s<caad-ord<r wndirions tor a mesimum or /2.18/ art Ga. < 0, G.r < 0, aad G..Gr. -IC,rrlr > 0. Th<x wnEniom re9oir<rM con- iry ofG asa foncsion arA aM Flar ail rslus ofr aix/Q mc< nlrn<d. ®DiR r<mnring rb< frsl~ord<r wndilqm wirb raMrv ro 2 wc oblain armalr c.. aa + c•• m ea + c•• n; Soivin6 rh<sa Woalions, wc fM dP=11/aD/1G•.G~-G•.Gaj, arrd aa dA=II/aD/(G..G.-G.aG.), wha< aa Rttzlling Ih< ddinirion or G. Ih< 1041 duivati.c af Q• with rnpee ro gvenby QQ•=F LG.4A +G.~J. Sobslilmirrg fran shc Vair M<9uatiom fmmeAus<IY abovc Iha bcomn ~da•-vFDRG•cC•Ga-G.,r(Grl'-G..(G.1s7. Sincc D is posilive, wc taow rhal G..TQ < [(-G.,R'll-GrrT=I)::r - XY w<aow ha.< w>IX'-EXY+Y')-1X-Y/'>U, hom whih d4•/de ia also I:oaifrr<. Thm we harc sM1O.m IhaI if omrdiriom R.191 d< irMeed sigrv/ a maumrms of N, y Ihay art rr.quirM ro dn. Q• risa ailh a. DrollMa Iaa12 S<ISing tbe (M d<nvmiro of Z) wirh respttt to N epual m sm ead aohing kr N, wc oblain I N I I =Z+Wf a-WE+W. whcrt walnl-el>I. Sina Zs's rr<m rregasise arM goa lo .cro u N beeoma rery la<ge. Ihe hrge af IFerc roon m «pecum e rdadrc masimum.'IM ' lued'N•,f M kingthelimiluEbaomeinfmN< aMrWgoaloxro,6(J+~OnlhcbhnMm{u W bccomb rery hrg<, N' apMaecha bs minimom reto< of pr<. Sirrce 2a dNiraa uniformly aRm N= N•. il s obvbra shas n<ama)I rarh a maaimum for anY "rm<gv N grnla Iban a c9ual lo fovr. lt s aho Ans Ihx Ihvc wiR afwaA b< iuire N•• M.<m Iwo asd thr« sachlhalZs(N••lisgr<amthenl,0/~ - I 9250 19611
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, aJv<rrising J< InaUs ««nrially immeai:JelY IopcFa Er' in sa csgwirFin eacM1 sonF nerinJ irrM1,+farya 11.11 anJ 11.). rFe Jcma:+d n raidrntifed`~Whcn ra4m nin<dvariahlcs n9lMrorgM-hanasiacn <aJm Jtt n. O(<o mpk inform ngF o a<m . wni na parnwl,r r«Irda sm<ndr~M .drnnnalnraa.rnau:;nskalwars:< n nr a aar<r •a <rttt. n aamann ~~ ,h~nmmy ona<.raek.~ m or e.mana m,9 ningkss. n A mmc subrkAprobkm exins. Thez sdvMa ngseapeMim rt(un<- w<II as rhry rit IM1e dal; arc nm rnnautrnt witn PaWas bexl- Ming demaM equalian. Lel M be she di/kmna Iassum<d <onnam) bctwan pria nnd marginal protluciion wss, and kI • be IM r<I<vam diu e`onsider a period in whicM1 pna, p, sla t. The e aollar on edrtt sing is tM d rrwunrM sum of asala limev M. Thesimpan on unn sala m li r of an additwnal dollar of advenising al lime r is giver:, osing eq 11.1/. by aQ,., IdS,•, 61b51•lI1gU)(.4J4)1 a, p aA, ` , b<presenl valu<o( rM1<eFang<in profl may be<aku1M as r'pV M dQ,,,- M 512 11 +.1 PAI _`Eu+:raA.- e,(1+.1-sss Foran oplimum, tM1s <,prcuinn murt bc zf r.quallounily, lh<marginal on of an addilional dop,f M adr<nemg c Paka 1196a. pR g0.gl/ ssnrs it produclion cusls wn<abous 25% of ss n thc whol< paioJ wvcrca i^dPng lQal MlC Fuais J5. Subsluing i nm 11.5Furling lM CSpr<sso cqnall unity, and m Iving ror Ih<nplimal kM nr.averfiaing. we b.re A = (se4) u+./ o+cl-c665i .nsdi:~ nmm.. I> p~:mmnre. II nl h e rlrc J:xnurn ral< a<pru, m m,l^Inardnediu c.k olalmal Mv<r sl g1rs aAso m r Wnarm find aMre aer<rr:ing nttlaaltt.irnik ml<s n~ <~ narm xmam <qnalinn U.p imnna Ilal any movam<ms m A nm aosW by manga in IFe dixoam r~TFC averag<nkvel or A i, Ihe semMc ncr!orl was 941, implying a onabk c of .124. 8m IFC Ooclualions in r rcyuirdl lo capl,in thc obs<rret Ilu< n A ar<ra1Fn dilleu o bclieve A, a Min r<n,eqt(I!61implislhmlM1CO malAi.s1146.avalue aedcd he 5)ryear sampk period. IM1< dkmum ra 1yr12 li n I WFm s100% oplirrm is 5]5. g r than oburr<d A fnr s. Thc observeJ A m 19]6, 5)9, is evmtbelow the oral A wM1m il nfni ConsHcrirrg Iwo rtt<nl, adfaanl ycarx A fcil rrom )TI in 19S1 lo bl9 n 195g. ImplYing tM1at r roa from SM m 661 in onc yar. Qnrly, <ilnn Plnknam•s managemml d'M nm view IM1C frm i dem,nd fonction as Palda daaihei it a Iney bebvcd m a aonsismnt ra na(wnal n for nva nalr, anrury_ mFromalnnansnoamx<mannalsinda-<u m<mndeannnl gmerelly ykld rcliabk ntimeta of <onsumcr respontt lo advenrcing. To oblain sucM1 enimala- t u ncaxsary fo eonsMer a simulurmws syn<m, lo Mr atlmtian b the firm•s derision lo aareniu. AM <ren then it may be impossibk lo krnlify a demaM lunclion. I< Iwe soMFinain9a Tne unifying M1rnrc of th'n book b Inal any invesligation of adveniung rcat au<n spmamg n uogarons Ir miskadlrrg rcsmu ar<w be rnvoNm x,IM1nr. i( ort,11y lake in unl IFe manMr in wnim nrm; ,ar<nis ~a mrl>an,r<a<IttmiMa~ CMpla 2 in estigala IM1e decision lo adrenix, surr<ying bolh tM1eordi®I siM empiriwl lilerasure. The aF<orY or oMimai aavalising OLSO 656LG
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yM;ll Rnkham nfd~cfnl aM w aNays o ulr~ kvz unbl a ucuGr accr„rc in:ala rzln ~ an ~Inc a~rnna world war.~• Palda's besl.c~rng esumam of IM dcmaM fmrcsfon wr FYnkhani s products'n Ihe f011owin& cslimasd bY o'dinary kasl s9uares ovcr IM1e pcriod 190g~19CO 's S,=-J699+IIBObe~e(A,1+I)<D+32T-2g3Y (L11 (243) (10)) (5.9) (." ~.6655,-, R = 9CI (.0611 DW = 1.59 Flgurm ;n varm~M1eses .rc sundard crran Bolh ula (51 aM s advcr- af dollan Thc nriabla T and m (A) are mesmrcd in 0-1 Yarz a sime vad and lotil diapombk pcrmnal i~me in currrni douar; Thc rnil indeprndenl rarlaWe, 0, k a dummy rariabk which rt ffnm 19ug nn 1925 ane acro mar.arm. n a deigmd w impan of an ordcf by IM1n Food aM Drug Adm;n;nrshon aauM nrNnvemb> 1935, rcyuiring sAe mmWnY so draslinllY r<ducc udilms for iu Produa I'alda has a.ariay Mun Lk rumns for m1 comidenn8 Pns el4cb-amorg tkm lM1C fatl llm dala 0n mad Pri¢s availsble. a On Ihe faa of Il. IM1is looka like a ruwnabk cqnation. Thc low Durb;n-Wacwn suliMk nusa one te wondv aboul sulocosrcielion aMluM ons6cexR'cnsasimale;ofwurxBUlamortaviaus Wobkm aul; l.ooking al dmPk oorrcklion ooeRdenly we fiM Orc klbwing for tbe PeNnd 190YI960: IA.s,. J=.iae r(AvS,) =9<I HA,.S,_~) = ddl Tha cmrelalions ®vc 11'c imprcrsian IWI thc main diren;en of m from aals m advtttidn8 If we firmlY Uclicvc Ibi; x Pildaa dala to asimam an Wreniaing dabioo fwrcs;on CasN on sskc such as iM1C k/lorring: --- narumiN:M1wOblrF.)I. ,--S6,NU6 f_,IIXA S, a p5 A, , I LZ) I w F kn 2 Mcirox /1969/ csrimala xrcral funciiuns o( IM1;s son am( alscmpn lo inkr ~fie parametcrs of P;nklum's dcmaM curm fmm M1v lezsl-squua n gul, ot murm, lf a fvnaion ot lhrs mn doa dcscribe M1ow shc mmWnY fiaed iu adr< uing budg4 lusl pua o inms es or vlent' e drnseM fun<t;av or Madvalidng daision fmwvlom vc Nm only are In a squaru nlimales of dcm.M furwvions irrconsislmt. but thcrt u -g avidrna ;n shis usc lbl lhry ert lolally mesningless Conodcring tha cslimalM adrenrsmg dasion ey. (1.21 aM Pelda s dcmaM epwlioq ep. (1.11 asa simokuncoie syrtcW bmh ue Nmlificd. l)x eemard funnkq wnh me eMOgmms rgbl-haN reriabk z jual kenlifwd by virluc dllr A,_, lenn m llc advenisirg dcbion f—. rnarc i; bowxveq good eridrna Iha PinkM1em (ollawed . dilfacnl adreniurg Iqliry in /he ywn 192619M lhan m olher ptt;od;" if wc define a rasiabk G e9uai b om during 1920.1936 eM ttro cl¢. wM1ert, the folloMng nquatian on be almuKd. A,=22g)9)+.61WG,S,1.d5M(I-G,2S,+A015A,.r (1.3) (6)]65) (.Ogal) (-0N) (.122) R' = 969 DW = L51 In Ihis cquali0n, milhu lhe corn1anl lmn r lk kggN dePCndcnl riabk'v rignifwn; Ths alinsna implYOM1eI adreniaing wes sn aa 6a ~ d asks during 19M1936 and al a5.60%of saks dufiM olhn year; eattpt fm nMOm Ilwtuslioni1e Fq./l l) saYr aM lM1at 1. kB am. yeu Ge.e.. sr.,q~e.Wu,~d M Meeputlonabaaern.'n,m.mrs,a~ne,Sr<u~hmrMrnxwm n111iq n)ary sol; meN M «ian ~m.p.acczn ol~Melraes OsMl.nalnn or ne Pinurm en. e~an r~e nil, 1990 555TS
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riaM<c ne YorJuranleRrWsinanstnes.renll ga e anJ siRnifrcanl in i~ an iniercaiinp.<ccm D r. N<Ixnn 119]0/ dislinguisMs Feiw<en h and eaDerirna 6oMS. The former art ~FOSe wM1OSC puali~Y cn b<aas«r1a1nM by caamination beforc purchas<, whil< IM1C Utlcr can only Ae erte«ivdy evalualed af«r Ihey havc bern acyuircd. If<soggass Ihat IM ra o of locai rc~ail adntising lo nalionel adv<nising will b<grcalo for surcF goo& Ihan fm apcricn« goodc and M proridcs iul rvODOn for IAn argumnl. rcAli lhe.a aulnors have aslemDled lo isoble and mmsurc IM impa« ra wnich mign~ artal th<abifny oradrJ9n6 fo rway Wr<ms< ams ' cl« xh< m«~ <s of ad sing Ix n impona a<miminam or advarcing o0myc bpr a nm m< sal<innprn« al wark. u ~M1e ~M1COrctial derebpmrns wFi<h follows shows. 2< Mmropwy Ae«n n ng: snd<Conalaana w< Mgm or aixpvion wh Rssmuss<n1 119521 inrargaron or oplimal ad <nising by a frm•vMa ssatic coMilions witn lacd Dri«.s mad<I wh<n vc discov oligopoly siluelions: for tAc a fare n of mm< grn noDOly mod<Iz 1.< 9 Mly rsotq Q, be a n of xM prcvail'rng P. aM tM umM d adve sing masages. A. DoreM1a»d by IM1C firm. We assume Ihn uch mosag«osls Ihc frm T do0arsa ovEM1OOI Ihis sludy, we dislinguixA befw«n adversising mnsaqes, A, and adv<rlising sDCnding, Ai If all media nte une4oln dwbk, a p<mm~eis ra<ry~aa onlM R.n I~ar~n« 1«~ «or ,er< ~grn drn <ban In rM nse or a singl< medium, i, is usy to define an advmising .mµna mMwn •E~ e mv~wnw nse.fenn ovMvv or ~<kv . < nnph~ dcfin.tl a' •- c aJ x< MM1y o~ emna~ nnn clfst af a ing m< J<t~ NnhylM1Cd<mandfun nfor m ~ndca for g<s; IM1s Is dox In h .^clf acM1 ndolU1 a yvm m<dium yields the sa omMr m<mpr r<pardlcsorlotalsMneineinlM1<mcdiom,iliscl«rlhalin<poillbrlun tF<Drvc Dcr <qoallY'eR<nive me.ttag in all m<die used Fy a frrm mus be epual. aM division of lolal sMaJing befwern media is ummDOnani Tlns ca on holds i! Ihe ms r ad inach mMium ane a xhe adv«r is nw a larg< nougn user orany maf m fms F~ i aes artm rha mmiunfs avei<na aiac. rz w< ar< in su<h a wurld, mr olM1ispoe nbelowaMin<AnDC ].w<ansrnsiblyu Ih<rc<on«plual frem<wnrk aodined M1erc. To <omplcte ow notalion. w< wrile bsal produaion cxt, C. as r fonclion of Q. UMer Inex eoMnionx profil in tM Rnsmusun moM mnY F< wrillen as 1]=PQIA.PI-(jQ1A.PI)-AT. 121 $nang xFC rm d<riresvc of n wim rap<cl 1. A cqaal lo xro. w~ oMain nc~ nc«uary conJlcion ror a masimam: PQ, - T+CgQ,. /11 5obsaripss n<rc and Ihronghom Ihix chaptcs iMZal< panial diR<«n lia~ 1<rm on fh<I<R of (2.2/1s IM1C <heng< in rcrcn« broyM abom bY pnfiac of an addiliona advttrnfry mes.uge. Th< serma on m~ righl arc /M1C addiliom b mn 6rongM aboot by Mcruttd adv«Ininp If sx -m'o as sn< <lasxiaty of d<maM wilh r«Drcl lo advcnisim ga (JQ/dA/ (A/{jk we can rt-wrRC 12.21 in IM form uscd A• Ras~mussrn. ' A TAis «n m snrn hc r<ar angM lo yl<N AT q£_Co PQ P R.] bLSO 655'.c
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cMr~ttng ~F ttnc mrnt liat r,M1c .rr . r~,nJ ng nlhnm . <anom~a,<h.a, <ma<rc or.m.< cngin <rbow am< 1.E. r mal<< o! rcirrti< aml ,. :r tmtnr< 1 Iha, nm o~Rd< or A/-q nsmndd cnro'is r<,~hough<wnnasiny,s <.mlh«uaa mror omnlio re~rAin6 uodculleoeR<i< aaMS~ ss eofrom AI-I/lo enSfrom AItIAAge,n. i<arr•rcmI obserrin6 umrl~on sinBadve sin&not iso(knM1Yro~hesix<d. min IM1e rroen¢ o! wiel lcorrcb~ion of rM1<ttrorc,wne of IM1ex enF nl.rn«<h~maimMa< ttlr«a<rial<errealion M1e Durbin-walwn slslulk h Uiassd in Ibc rrttena of a IaggN d<p<ndcm r riable" Non<IM1dea, we obmin m es by rollowing a avggeslian of Liriamn (1961) and k<aM1r,g the b~ed d<r<ndem variabk u mdogeneus. < rrocc<dN va rohewa ~o rrttlimam madeh e.l - cnlb. rirsr , r<gr<. wnia c ane c w< <,rhi~ by r, ~/i< Fed<rA Racrr< Rank ef Nev Tork dittoum rm<, a tim< <na Mrvlaron. ncs <,I,ona .M rMaal noa-0eknu slwnains Thc laa rw <arrcaa<a m m donars r<r mMu. a bNOrc All weRrcimbW n bo1M1 regrcasio,nwertlargminan IMie ua,Mard The R"a wtt< 99Eg for so~el mnsumrlion and .9g65 f« con- n speMing on goodx The fslted .aluu from tM1em rcgrevions er<rlsggetl one 9uantt aM vud le r<Dhrc C/-11 aM C7-1/ in In< Is of in uummis ,n 1. mond slag< of imlrummral rariaNs alF w<rrsl <aam.rel modea cl. C.ulb In m's rasnion wnMm .ar<r. sing Rtl <ighl R'T werc above .99. Metleh C.1 mM C./1 apMied so onfailedmmrkselY:onlYln<IaggeddeperMmlrariabks < sgndfont In modeh e.lna aM elna onir Ile <oMlickan er w<alm ard or slrc laggca a<D<Mml rariabk .cre signl6®nt whm these Iwo equalions w<re arD1iM m wnaumu spmdin6 on 8oeas. enly tne coelficienh of Ihe Iagg<d aepeMml rariabltt w ilg~ifi®nl The vme rcsuh waz obtamM for model C.II. Hcme mode: C.1, whkh bad . aignir m inwm<IVm, waa om bvl esfimak rm <onmmplnn Z6S0 656L5
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Tbr e rss fa o E M Y rV Frm~n lt 391. miy M wnoen arl eiirM1frmrs "I~C:•dnr.n'il-myl+ri/-ri-N$rs~~. R.JS/ vc' Ir.<rdlnaM1<rtrnwr<ane,:.nm<mpuh<.•=rc<o.n.m and <9pal. mis wva~ion sl«laras m ",T-uln[M•+0o-M97+d1-R//I -Sr1. IzJS1 The n ofth< adve sing .yvilibria imylied by tM1ex w drMnds on frms' ntKCUtions abom canp<1Nive mslronsr, mnsured by tirc a: ac w<II u on adv<niring'a <Rpnivmasa mnsur<a by th< d and IM1C J. aM pris InIkYss it aRcu Ih< L'. If th<a' art atl <9uat x, far innana, and an drm- and casl rnnctions arc W<ntinl, M. (z J6/ redvtts m/z)1 or lo Iz<) ir monopnly Vricing lu<vaiia Thr inana r mrn aa.r aly a< nnnlmrn ovla. Allheabn cifallalrtconjMUnlelm[ o,behav Irondv loathsmposil<d in Covmol-Ikrl nd moddiror outDmf ma formalion. irACed, atl tM1Cb<havtor pathrmllat hav<bandvcrib ra as mod<IS ofoligorrotY Mi¢dnrrminadon Mv<th<ir logid c^unhr- /nas her<.r'AaisrominuilY walrmieonjenurel<laslwirywnespondt ' o IFe kinkd dcmard enne d Vri¢ rmmmivn Ihwry. fw~M1 lau m/19I9a/ arM Taplin (19591 in rvi<wed n who eanres.ad fnrs M r<talimion by wmpetilorstV Ihey ad.enis<d abovc cawabk 1<vtis. A numbn or considn,lw~u, how<vet argue Ihal sucM1 fmn arc probabty nd grnerally imponanl.r' Sime th<rt n vsriation wirM1m ea.fi yeriod in Ih<amoum d promaion undntakm by M1rms, it s hard lo anM changa in npmdilure I<vels. This /rcabl<m is com- PovMW by mr nomraiuena or good, cv rcnl figurs m rrrms aaver- sing owhya Funher, it nkv tim< lo inetnc promotpn omipys, .o Ihat any firm imvndng ils advrnising cnuN rapM a ai.cabic hg bcforc its comMlitors r<spond<d. Th<eaislna ar suG a ra6 incmasn IM ircemivr to niu advmising Flnally. Ihe impaav of any advn- tismg ®mpaign drpcMs on IM wturt or Ihc'ptch' ax w<II az on IM .Mero4pml>.axv/..nshmllor0.a#.N/ mmwmd nm srsnwnns.re.auuv..ey.«r...nsraennsynt .. ^ iich ~MsM1 n ~as axvdPCV a Pvlitcakrlv r e abilily M ' ors 8ood <a Irs^i8 ni8n mfM w<n'.ou nsl.ma vim cminln nal mrmn 1'M1er< ~oliRot+aliohilm ~wNina advmisingnaM thos s[teM m n rM1al a monolroyrsl would r' Simon 11965b.1961/ M1ss argurd rha ~Ilrc aasumMinn r/ = oh era/ly n good aPproximalion lo rcalily, aM dut it caylalm uabk .e.nr:ing-nln nr ,a w<n as tnr hrrvmnh nr Ir..ai.< rnr nr hr,.r n. r Ln ux rhrn, avIYE< thc stsa<ial nu wbn< uch rirm anvmcs W competitors Mmtitlng omhYS art nol inlluenad by M1s own annronE Wc aavmc Ihat u aM r art comhm and Ibat an firms havr Iluatume mzl fusrctionv Thn 12161 becom<s, fm Ihe tY0io1 frcm ip an N-firm iMUS1ry, AT alAN-1) P ~ 9 L N 121tt whi<h r<ducs furlh<r to AT N+a-1 na N L 12M) -I. tiorM above Ihal wR ienl mnditiom for pafils tn bc mittd by I239) ne Ihpt Vmductiom m~ br nond<cr<axina ard t hat tM1em be dimmishing nrt murns n nd.erlisin6 UMtt 1. nuomptiom made pbo.rc, this Iatln wnditipn requires NqN-I/(r-Il+da-11+3rfN-Illa-rt<0 ttris holds in genenl if a4r£1, wilh m Inn orc tnryualtty haWing itrictly. Ir r- 1, .e musl M1av< o ridly ka IM1an w¢ W<amrmcin whal follows tM1allM1erc a~ediminish- ing nss mums lo.dvrnisiny If L don mm dep<M on N. eqa (2.J)) and (vJ6/ bMh indiute M1et ~.wa in sinw.lwa^ gP. an.un w snrnr tnm pn. t.wnu. r ..ew~r.~r«.r<oe,em.~wnm„w.<m.v.r...e ~~.mktloepf ~ Z2SO 6S6:5
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u<p<na. o aim i~ <a~m. TM ulm wied unprW<~<minN. paro~mM M fnanumnaA < wrak mewunn<.aiaw ~n<cnmtt wimwmimum- hm ~M a<penem~ va~iank waa mnwmvnon or gonM ~ r. ~n< ~anean <.~o~ wa: niaima nr moad c.ii. rn< imv.o.<mm~ 10',{ mohl C I wn rrof signiFwnf et fh kvcy Iwwcver, aM ~M M~ epwfion wouM xem fo ne fM simpkA, madel f I. w< s.y v<af<a aav<nising n pe<dn<miinee. i8nonng m< fan ~na~ wutd M®usM by wnsumpflon WFeo IM ad-sing vaeiabks rc eddd fo moach c.l - Ullq th ofhc cedfcienls gmcntiy «maineJaignif m aM evsnnabk; xe iM apPmd'u fof anaila Th weRqmh of IM adm~idn8 nriebke art <hown in Ubk ).1. The iafm a:rmv~or 1 nanaa,a «<wa .« a vafmmw wan ~h ~enpandingewufiai<rMlow. ttaggrcga~e advcniaing inlLmttd aggrtBaa mnsnmpeon <Mndng wooW eapttf boih fM weRrcimf M adveniNng a^d iU auoria4d w M q.g<u wiN A. nnf Wga~ wis H-11, aM Wifc small whm Ali 1/ i< imrodu<M inio tM eqvation Nownert do we abzrve thia ln m ax dott laggd advmtisin8 na.c a poanivc m<Riclm~. A. wc go f<om Ai-li M A, bmn fM mtl&i<nU eM Ih<easoaiafN r- m IM pmiiiac dirtaion (n In< thrtc bd-GUinB <aoa- m ro~ r fou1 -punn Ic.i. e.u and e.m.lmis pauem .e go from A to A1 a I/ AM in fMCqonion fafwnrvm%ion apeM- i~ on goada ill four taUfinia arc la<g<r fm A(+1) fnan kr A. Thar findinp mnlli<y wiin ~M n/yeiMd tnaf ~wfui~ hss a pnvvamf imyc~ on cdnunp4bn apmAnb iMy rv88<sk cunm Ihat agp<garc <oaaumpf ion inmentv aggfcgaf< ad.misng.itn a aM1On Ug v me is fM wsc edvm~iai~ rMuW 6e nesfM v en maogcnov< ~iabk in fh<z tttimmee Ao<eeding a<ncfort. we round a frst-sfag< tymfinn invoU/ng only lnc maal mmonro riaNd, tM1al eaplained cufrtm yuancf'a adv<niang fairly 1wAl. The ariabla um] wcrt a coananf, populafion fM F<dcN R<xrv< eank of Ncw York diswum <att e fim<If<mk ~M npnns, aM lan Qoan<r s n rtsWrnlial aM io faidmfial n rec The Ias, lhrxfpwmifia wtt«xpremd in rcm dolbrs pef apiU. All meRi- wcrt U<ga thm ~Mv n mmW slendard crton, aM tM Ra of Uis Fm sU8<epwtlnn wazf'9941 We obUined cfimala of iM <onsumplion funwime by rtplaving A m IM sn A insttemmU urtd in~MSnrnduagcwilhiMGftMMOSfromlNni<g<nion InaddNbn. I65C 655,5
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ca Izxi immi<. rhm aa•<rr ing rv~ki<r M,<a «, mrrnam adv<ni.:ns nlir i. nal rm. mp/rtna« e.i raln :noeax m nl.mm ~ea.ro sock.l M1 is nol adv<ni rgon s:ng expendirur<. W<havcnncr<en aarkramr ,mad<I. Thc ratio of IM srock of goodwiil lo saln may b<conslanr, bm n thc Jlaw variable, advcrrisinq zl'<naing «itl a<prnd on lM <M1ange sakv No empirint in on tnw I a re M Ms proauad r.id<n n ortmr<h.n Aa.< r,g av<nains.r«m. ro k< rcIZIM m Ih<rlevel of nla rwt to IM changc in aks. Onc approa<h lo tnis probkm was takm by GouN fl9lol N< invmligalo rhe Ncrlovo-Arrow mad<I vntM1 tM eddM assumptiw that I rsin8 ban e~bane knnion of A Thc optimai svatcBY n Ihm no longcr of tM e~bane son. When dcmaM doc nm d<pmd explintly on sp<nd:n6 fait<8radually re its <puilibiriom kM it tM ninial ad.ariaing 1 goodw'rlinocknb<lowequ'dibrium.IfSkstaolarg<,1Mkvdofadv<rsis~ out low and r'va erWwlly to <qoilibidum. Fq. (1g16 an ~ii~x.um vrop<rrr d Gnwd. moe<t «Fm r a;nr<rprnw aa IM ginal cost of adrtrthinB memga. mGould argw IMr T ix an inrxasing funnion of A by ciling tM fopowing Nsne<!mm Nerlovc aM Arco«:'r .ery Man k ersaKa.rc No mVpmr for Ihis observation is givcn by in amhors or by Guold. on larg< adsenlmrs ux a varkty uf inedia: it is rrM dnr that any infmiol.'Ihe <vw<ms sznn to sugg<at rhat sM nrarginal co,N ot aa.<nisfos mmvag<z in n m m<aimrr is n fareng.ra Therc is IM1US no <mFi^nlsuppon for GoulBS mod<4 arM wx mmt arch <hc«h<r< for en cxplanafmm of obscrved adv<rlbing dccNion n. W< tbercforc eontinue to fello« tM sunpler wur.x af allowing onirrn resideinthedemaMfurwron.notmtheexprmion forytM caat of ad.enising. Om point xhoula M mad<<ker, Fowevtt. I! IM pria d ad.enising myseuerte.MM r w tax .na rwe.rra eorrL.m. NoeWs r changcd, wc weuld nor mN th< mmeM of inesssge= .<Thc r<IArinndnp n nua b< naan dotlm pcnding and cM1nngm n d<mand. and it nula ne a mairter M1crMr one apo4<of incrcasing <o.rs of g.wdwlll nrluf dlminifiine o advertising mmmga Bm oms it is ndminW IMI tM pritt ofted.<nising nn cnange, N becemc mmsary to nire Qumlom ol antion .ne w «har <mr rmr .a.<raains xa' <onsmn.rm kaa neturrsgy ro tM wnupli ofine.mga or mprnura Frorrr tM1CnaMpoim ef tMOry, ths appma<h Fas IM advaMage o~ mabling ore to acknowlnlg<tM dirtermm btlwcrn a<Fangc in msrspapvadvc sin8ra andmn cborabmwith. mrlaradver nng nmpaign BdM1 Wtt M< mlatim bet.<cr dolNr aavmlvrH spenaing and nIq Mr( tM1ev implinliom arc by no mwm tM am< Gou18s ypcr alm rrnts two otfiv modds of dymmic rtsponx lo advcrtiting essoming m Nerbse arM Arro« do. timt pris Fn m~ sling <Rects en dcmarra. iM dynsml< Poonxi of Gr p(196q ana Stieler(I%Ilareempbyed'". aM <qWibrium stla d<pmd roM'vrmrl) upon advalisirrg sp<nding in both madels. Sina pria is wenlielp takrn x fnd'm the<mod<It lMy ®n be vkwd u sprdq mn of e rc gmerai modd of adv<nidng und<r oligopalY rnndFiom «Mr n<F fmr vpens Fk rivalf adv<nising to rcmain eomunt. Bdorr ' s ir iom, .< cnnzNer arwlFer ppraaM m manopoly aana sang wMm dymmk caMilionse to oqi Sb MoropdYALurnieing:UyrwmicCOrd(r(ons(Il) Ther<ar<a numb<rutl+<culiar Garuraofthe NerMvc-Arto« nrrxYUrc Firn, sirrcc 1Mdiur<t<analog of (3.5) u J7rl=A(,)4(11-blSU-I) (25 for wme eomlarn 8, unka rM dcmard function QIS.F,sI'n /irror, i wl bc impoxsibk so rcmo.e the unoburvabk S ur order to mimertM dmuM panmeterv Nma this strunurc bmn onlY <oirxidmm r<amnlass¢ o tM mn of dcmarM funCiom ntimatM in praczicc Bennd, tM unobservability of S maku d d-uF to formnlet< tntabk Mvenismg dension eQUerion basM on tM N<rlovo-Anor 9190 555i5
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+kmam/ nnU :Ae inUu.~.y iz nill ovcraJver~izing Am few I+ave maJe M1arge 2vidcrcemincv reofeozn rrc~mseoadv< ooidbc Mirabk to 'I IiJdrn zo:MCrz Il+rz+f. gm y zMet a bazic que any par wlar wM1qhtt aJvs+ - x~nan nn. <noi«. wncincr n ren rnannd n~c:wilar<+nm ~inaxany aa nrwaM lo ao~M.. o sacn raas nb.ioadr woow on/r mnzrlom m~ rrn munr m<wcRara ar6umem, sina we would still havc lo delnmine wne~M1O iMuencing undesi ebk a y pm se. ndvs Insofar m sing in Ik u ihly d cm+zumplion"<vm eonsumpiim d wnas most readm d ihn baok wouM rcgard as innerendy wonMCa mmmodi~in - some amhora M1a argod iF nally Mnef iaL" Ths ssWy val wi:n lo poim oxl m,< mc ra~~~al wmin:+d,a ~rs. ~es impaa m wna~m> A<havior is«mnl velua msdad sing. Io/51 Finally. sr ng hasvbcen c. irixd a rm d m polY er, generally Inro+ogh iu imMq on eondiliom dmsry. Bain(1956. AelargacsiM1attAeminimumM(ic:rnlaixdlncf izlargninsomc nduwrin, aue lo eco+wmin orsok in advnlisire, aM shM adverlising sofnraMloyalryrLalworkloll:cad•anugdsnblizh<d I frmsa Comenor and W il»n (196], pp. <MdiS/ argue in add'nion, fM1al advcnising Imds lo smbilix infarmal rnilusisc priring aPO+nanls iwo imporlanl poesliare ot (an Aarc bem nised hme Firs4 art . IMrt emnomies d s®k m advenizing? Tne qonation in Ium naz two coml'o^mrs: (II wnttACr n:cw_sxivs ads in a givm mcdixm nevc innns- ing mar®nal cRms an saks; and (II whcsher Ihc marginsl cosl of ve sds aeclina over any range. s TM1e sttoM major qontion M1inga on IM doralion aM atabiliry d aavcrtizings cRttn on sM M1alf-life of invalrmnl in advcrtiving if sodey's advcnising dan n aR so sala an w eese mccly advmsisn nl 1. .svnc rs n6lGmnso e ch IM1Nr g:wewil wilh mnsumen i~ she mnn hm:4 if advenising lads b sraAk parsems d traM bPhy, n as it 6rms wert invesling n slowly depruialing stecka of gaoewiR gn mlranl murt mas<M1 lbe lockz ofnisling Firms, eM he wn do IM1is only by spcMing mort Ihan thry do ova a periad of rime. If Ihry do nM lown Ihe'v edverlising n iAC ra.z nf his mi.y, atl Rrms may <ml op aJv<aisinp morc r<laiivc sakz ~+TAis +uM1ik n mp:ul lo inJiu wnar snffa<v zlManwnulvhdo<rMm msqaJvc n be evaluaud SaJly, we arguc s:meMing cb n lnel nn<gnl rna xirel <.idma c rtmy e s'IM1ia is auc ~ack nr crton er cmNri:any-mknsm «orwmi9s. m+:l in M^ m dala rm : sa~ ~M m o M Inal m rlwin m aamaaltlr comian Ih< daaiermiwn~ d ae.enidns pcnalmrt. In panicxiar• aittossions drrmf advardsing aMSion ralv r<ma mMa- mrnul diRCOlua m m®s ri~g tAe <RS~s q aavcrl sin6 on saln Ll IFe Measurmrcas Frohlem M individuai frm s adrcnising sttms tiksly lo inROma iu zalet bol it ahn reems qwse artain lhal Ws mnom¢ edvMisex ror mon frrmx This skms Rom lhs commm employnw+l d a Mramage- q- rxk m advnsuing dMSions; we girc aessik:l evkens an Inn poinl in <M1aMa 2 Fimc wc maY smlc Ihal lh<MObkm d mlimMing a d<maM foncl:m wnm aJs<rlising s acnrmbnd panly by ssla bu bavme a Inlbook eaampk M lAe diR his mooonsnel m simq- mus equatio:ss syslmurs Givm tM1n mqvaldcfuMmce d adv<nir g and sala• simWSmrcoos equalionv rttM1Mques mun be empbyM n dmuM w on. Failur vu sutl: melnods may Madua biased aM mizlqding slimala. to In apitt of tha mosl d 1. rtlevem Rxnfmc- whid wx diuw in daail in chaylm 4. M1n vud mdinsry ImN qoanz meRwaa To Jlostnle lhe yrob)em, kt +s wnsidn P.Ida•a 1196p oRtiikd uudY, x or lAC f rsl lo ntlemM lo muaon Ihe dynamia of eemonur mpomc o advert sing W< sngl< it om mainly bcmme k esM1ibitx moA of IAe bazk aau n.ae in lnn r<gresson aiulysis.:' pal:ls was onanned wilh Lydm E pinkhsm Mediwx Company mandaaurtn siom 1.13 d. palml mcdicinc allcgd la cun a widc anq.ea..rro +eaqa::.m+x+tgonbrtlnpa..hn.aw•>•.a.~ aa.e...z+n~ 8990 6S6tc
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rorfd,rllu.nUve rrJ~rll rsukai ~ cr fdemamf w nr:ulvcn p s.ro anJ h<ln n(n-dcgettofmcnapnly. Dn.fm n and Srciner It95d/MBan rM1eir unalYsn wnF c.prv...irn 13.11. r alsn a/lowcd the frm to vary irs pricv.' DiR<renlialirg cVIE 11 M vallvic eV wJhrlrespttr r aM xlingrhe dm val~lo sro. wc oain IM owal wnaa on ror monolwry ml<mg. hac E n minrrs Nsc laim <lanidsy of d<mand nc usval E musr M grcalcr rnopolY Mvilibrium. SuMlimfing this in o <4. (213)Z1 )w< obu n sM prln<ipal 0orfman-Slnntt mvll: 1 AT o PQ E Ey. IEA/ saYS rM1m a monopvlist will advcrritt umi1 IM rario or d- advm1ising Ir drRa. mla <VVals IM ratio vf ft adv<niaing tlufitlry of demmd m sM negauve of rM pris tlasticisY Ir tM fwo tlazlieilin M oVlimal refro of adv<nisine m mka .cmains cons•anr nf l I tM pria or adv<rlising ^'asa8a <Imngcs.° <wE¢ (2n Ihm pm.ia, a e<r<nr< rm wnd<a bum on .<ormmx doilar adv<rrisirrg-0ollar sals ralio.IXmurs<IM argumenr sarrongen n tM ax ot subiq estabinhcd produei wMr< ft admli.ring ark a dasricities may be <xpcqcd m bc svbjttl ro anly s1iRM variarivns. produds is likdy m havc a large adv<rruirrg daslirify. sintt a larga rraaion ur any aavmrsirrg apmeins k purcry inrwmarrc, in ft se .m ft n rwds thc knowl<dge of ft pradueh <n Eve indusvy c+sh raqd lu va W new produaz Iilovelr. R irNVnry d<maM is rdalirAY srabk~onc wolJd eapm IM1<frecliom or producls Ibal are rrew, stabk aM d¢lining b M r<lalivdy rmchanging. EQ (2a/ lhm provNn. ralbnalc (or wrr:.am advenising-mks rslios .ne xwa m r..mmn.mmiv. wmadyurmiwmrw.wr.s..rheramm~w oa.pn. c srm tl. TM DorrmanSrci r mrd<i Im agh <1<m s of rleallrY, hnw<v , Ihat placing mo weigM nn 12<i wovW M unjivlfrN allhis sug< Wc musl crosidn impkcalinns r(1M appartnr facl IMx advenr B<R<crs on d<mand pcrsin rvc rrmc. 25 MOnapaly'AdcmisLg~Drnrmi<CadlrM1...(1I N<rlors aM nrrnw 1/96z) mnsNCed IM pMnomenon or aarerrsin8a rngmins <RM.1O TMy rrmloa 14 ®u or. monopobn whos<acmana dcpcnd<on a eoodw'ili alod. S. wh<re ~ " - yS ar° R.g ndvcrtisine n ricwcd in Iks modtlaz gros invnrmml in a nock.kcb deprttiales al a rasc YIf wc kl dm+ar- slro d<pmd «plicisly on limc wc un wnl< IM Row of q- al any imlen/ as nRl s PQ(S,P,.) - C(Q(S,P,r/) - AT. (36) Givm IM fimis nln of dismum,., fM mormpolin fe¢s IM probkm of chnoYn81M 1)mc-pmM of P eM A m u to maximiu IM preenl aisroumel nlv<or prorls, (24) (i.t) subjat b n/tial mnA/ions, eV. R51 arM any upper arW lowtt bovMs imposcd on A. Ncrbn arM Arrow show that IM oClimal policy 1. of sM bsng~beng ri<syif good.iR nW e below sM oqimal krtl, 1M 6rm ahould adv<niz m mvd as prrv<(bk. Ir 5 e loo largt advnfiang slmvW bc M ss drmsio/ly u pomible If w<kt'i bcrh<duticily ofd<mard wiU r<sp<n m IM goodwin rt«k.(dQ~a1~(Q/Sk IM dcairal (imunlanmmly oytimal/ rzlro of gooda{II stock to sala e girm Fy <IMrrmralaul ~.rl®rieedpi.medrlmrMwa.re ST PQ E(ay) SLS0 556TS
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A STUDY OF NATIONAL ADVERTISING EXPENDITURES IN TIIE US ..I lnrrMxrrirxr The enpirical w«k survcycd m rauon 22 gmmaYy omFrmN Iwo .oPOSR1 s aMul lbe dcic Is of adve sing spcnding TM1C Bra adva sin6 resPOnds lo oflbc ciled or4 fovM widevprcad use a('PSrcemage orsa e'da rula. TM1e ttco:N propesilim was tbal cl:anga in advenisft Iag bchind sFanga n uka Only Mtlrox119691 Fas Wrmalty atimasd aducnid~ dassion .vks, hnwc Tbe fM1eomiwl eiscussiommmnrisine Ibc Umk ofbnpa z Pro.ided Gnd:ng> We sM1owed Ihm IM1e nlio of Jonarreamlisingpo EoBar heu seia mu an orgePOr sM1Onie mamlaln m s Profils dePeMW m Ine dcgra of mo~wPOly ILemers urek B~e smsil iriry of demand ro l be f rm s own and in compelilort advenivng IM1C dy~umic nrvclure of dammi aM <aPahalions aboN cnmPnilive raponx lo nAvcnisin& omlays. TM1C m in Poxasc of thn chaPlm is lo fomsalh in.asigete tM deIe u af Us n onal aAvtt s:ng spendis~g' we rtla4 adrer singeapmditura olEevariovsmmponrn4MgcoanationdProdva bcing aPaciallY wl~rcemed wilh IM1C IaB slruqvra of rM1a sdrmising dm ma Bdort an do this, bowsvtt, we need lo mruida a simvlunmus cyvationsprobkm1 ifoncarmorcofllnGNPCOmpanmuartiMlomcM M rmmr „ y aJve .ing we M1ave mFkm m mnN in M1uMs'r anJ minM in dnail in <haMr•41FV1 in rmeru. Tberc IM mnarn is a~ Jcmmd fun m M1c cn cmly <s mmd hy ka fFaJuc sinR d<f:ands o nsnkx Iltt<s'iM1a MoFicm n BM1m n aggrcgau aAv< xing d¢ision ru4 u 1 M es ma1M m y by In cs if lomi sala arc inllvrnttd by raal adversis nF~Lvctily, we ar< bkloshow nI.Zl+elow,rharmGNPmmPenenisar xigni~ fiamly aRmW by aggrcgme advcnisin6 Smlion l l omllne Ilc rhwrarcal framewoh of ouc sludy otadvnlis- ing's dqmminama. Thc sPeafolion of an epualfon to nPUM loul onal ae.cnia:ng is inrasga4e. This aPmirmr ia mm nue in onl<IVCaPlain naladvc singxPardingivcacbdslrtmajm ia. Th's cbarmrs Bnel uceon aummaras ma mam resml: and ~mPlinlbm or the sludy. Our a nal advc sing dau rc derivnd from erly Figura MovidNby lM1e Columbu Brvado9ing Sysum aMadiscu.md m :MnB.ThryarcasmriaRyeatmsiomotrM1CUriau 1byBlank U962) in an inrmligalion of tM sehlim of Ioming Mlms in narional adrttluh:g sPeMfng lo Ihou in geneml busincs aelivilY a Figvees for GNP eemponm4, raail n4s. and PoPVlation wert ratm from Ihe Snrvey of Curnm Bvai~ .M Busma Blaa.nin Thc adwaising Pria dcl4wrs uud m rM1e iua~ sxlbn,rt mmpurcd and A'svsue m aPpendix A Fina119. IM1C uriv 4r ldall:ouuFOW wqkh in mrrml Jollart fnr rhe Rderai Reame Bank of New York's disprun~ mse, aM kr Ort mrPOn4 boM yielQ wme Isken from Ihe data bank far IM1e MIT-FRB-P<nn eeorromnrie model projecl. l3 Adoeniai.q en/ Aggregme lhmnM A numbtt of amhorx Feginning wkb Rordrn 119G2A hare argued IMI adverdzng .f&cb sFe level o( agpagam aemar:d.a xansen I1960. P- lbl hac o0ed fw munlcrcydiol rc8ublion of aE.crlisln6 sPCMing, asNGal6raiN1196211wamrlW /Faladrmtisingnamaprdetnminam dcanaumn spend'mg Palsnm.` Preliminary caaminahon ofrhe hyi+o- BESO 656Tc
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aJve sing sales ef wlfM1 N^ E«ven e= Wi/1fM 1-1 advc 6 if N r gr<mn~Fan ne n fn<o y,M~lisfs.on r:. < m markrn<sM1arm. mg< co r aN o ws ror rx rrm. <q. ¢.lsl naa fhe.an.ryins imrNi<m onamaf nror(: ~wr rrm ran (o nro as N dtt,, garaless or r Frc <mrr ana <omrniaon in rromofion mar diminnn onopoy rmrt mough mo dmimbinfy or fM1C reu,uam I<vel or amr. uing may be quenionabk s' Proffs neM no( be eliminafcd by ifrcressing N, Mwever, m ey IE l]I snowa If r is kss tM1an or,e. edverfrting is n<w aowrr, afw if av«ag< cvsf is <um(.m fn< o(io or profil m saks c approa<M1n rAI - r/ as N rins. mTo funM1e ezamioe fM Mttfs of changing N in fhu modd, w< musf allow ror fM cR<cts offhc numFer of f,rms w L LN m assuma in order m< a<rnifr r<.aNa fnaf m< pricoi o/ a<mand foE; iM m fwbicF mn.u b< I<a man mrn,,,my onr rm monorolr cpuitibrium m zi.fl FunM1«, w mc tbf pr,cing folbws fM1 pk Cou.aor panern Tha( is we assum<(haf 4N) = IrNE Finaily, make r v<Ir-ap«aling simplifring ump'wn fbf r= I. ~WitF <onsum,o'. fhe rosie af dollar vdverttlng divNCd by dollar sala wifM1 N frms ro the same rafu with mc frm n givm Irom(27g/as Z, _ [AT/P9)al[ATlP9), = a + Nr+ 1 Thn is Brafn fM1an one if mk only iro is las fnan I/IN + 1{ CkarlY, r« u ku man tn. fhc rafio oradl,r advenirins ro dollar zale rescnes ar N= 2 aM dslims Ihereafrec Is w, ssill he.nn abov< fM1c monopolY rafio ror largc numbcrs of (rmx Iwwcv<r. N a n small <nwgh.lfe= t,forinsmxr.l,=256krN=S N w<amrmc flnl avcage vu'ubk mm ua e«adm. Y, yriz is equal VNEANE- II TM1C ra o of dollar aducnuing fo unif sa4a f« N Grms dividcd by fAC rulia for oac firm un tnm bc wrir(m as Z, e[ATl9)dUTl9), ® NE-I o+ ry- I= Z, [P.IP,j. This nfu wiN be greatn fM1an om if a„d only La o les tnan (E - 1)/ [EIN + 1) - I). This Issf <sprasion d®r1Y ralh wifh N. Nac Ihaf Z. seSfiakr11/96s,fm.emswuonnr. a:dwaysl«.ma~ rcNnrm,alwan<nmg<alow ,«fnan rm,,,ory,lis~. R n is ca mqn f r: - Ivlle - IA rnc mfro raa~llar aarcr- r,si„g tn unN .u,h. "n log.wf for N- 2 a,W dMMa fncrWr<r. Sfal msvming <unnam av<mg< nsiaMc rost wc ran uslrc f« fM1c fiowfowl aav<rfiairmrm N rrmafo fofal.arcni.n,grma monoroxn. rn<rcwxis ( Z, _ [AT].l[AT]i = ( N <r fi -_Jr. r a +N - 1 "a-n Inm<arn<naiammiad,arl r<r.w<Lnro ))))uc ca nrsi.i. Zsmyrachnsmaz,mumfocN=L2orl. llse fnf arW swroM osa smn mosf lik<ly; N= l rcqnisas a very Iasge F, sN a very smali u. l( n dear (naf Z, an bc rcrr large for moderaf< N; ror n=.1 arM E_$ scvm 6rms ad.vfix fM« flmn much as nopd'n(, tM1OVgn fhrir rofio of adv«fixmg (o ani( saks onir a is IhN<abovc (M1<monoroly mfb. ~~Ir Inis modM on genttm< ranaidersbk ever-advntiring in fM1e xnse sha( an oligopoly may advenix s gooa dml morcfhan a neroNn would. Any pricing paNCm (na( kaps ma<gim abose (Ir< Cournof kM raWts in mo,e adrerfiang fm nd, nluc of N. As wr not<d ubove i( tM dcgnc of nsorppely e mnnanf, ad.crlising r^II in gmttal ria wilh N. W<do havc Ihc capatea rmuh thas, wi(n Coum« rricuq as N kmime largc 2,. Zr. Zs aq th< rafios of admr'ning andofrrorf mssk,.npwa«o. i'ivlly, (he modds sreama m(Ns axbn agam Irtovide mnr<ntionek tor a munm adseNsing-sala nhw If snc rekvam eYsxau« an an1 surh a pro«durc, wifh fh<mrrcn m(b d dWler edvenirirq maalar,alea.nopima. 2g OllyupolyAaorn&hg:DynomirCuMirlons TM sim<lm .yss<ms aiavsrM m N,e IsV .sttlion eaaW fvrmv)!y be made dyrumk by posnirrg gradud adjunmmf of unud a dmirW adrenni,g aftl eaaminirrg fM1e nabilftY a(1hc nmk eyuilibrimn poiM. Sutlr vn invetigation aouM rwl sdd muds to aur kswwkdge d(hc d<I«mlfmnb of advcnnln4 sprndine. M1owcuv, a,d i( u n« WnueL hmc. Pafhq w< Irof monferrrary eWlibru in Y(oN1«rs wnem evfrear demaMmpmsdf(opanacYiony/umaswed'dintM1<mofwpolyoae. ~ FBSO Y56.5
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51954 0611
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pnMine enMCwhil<nomM~M1eevuaFOns r mnl<ons p n e,lly.<spalaF enN o a>Jvc sin8 u •~ill ~e ul/ iFrtt s<MO6 c TM <o<I4<le nf aave m enow lam< nw .o<md<nl. nr Iaea<e .a.<ni:;ns ,m ~~g e rc. nn ~,rasrsm mo.< F<po:iritt eirxmn,. w<go rtmn nl-I/ro A>nd nom A w Al ar rn<y rmmu mdi<a~<. mr m<mim sm<. <,nsauon aom <on.mmpron mMmt/sin8 aM IMy olftt rwwvpon rorsh<LYOO1Fas Imr edvvris. umption. on IF<bvs of an rh<mrimara in m§ sMion. ua acpr IM nvn nrwl~s mal aa.nnisins ,rtxu ndmtt ,ggr<gali mul mnsumpUOn spevdine nor ,ggr<gam cownqrion sp<naineen 8ooas. Th<se <omlusiom art m~w wey imonsisl<m wilh ~M privm<proGt~ ani/ily M advenisi~. Adrtnising may ahi/l pur<M1mm nmwan firms vm Fna<m iMunri<s, nm <bnsuma s,ving doc nol appmr so b< m all alkq<a. Advenising nnrws n< praiad fm baoms, demn<d for o. bl>m<a fm k<eping fuMs rsom Ihe pvbli< rr<asvrr. Also, nrionelly advcnisW mnsumm goods do n m bc sub rmd for Iora11Y adv<rsiad sniom wlxn nariorol advwising in- saOfm weFaw~wQUan<Aydauonlooladvcnising tniscondusion umt~ v<ry nron68m is isd<ar Inzr nasbnJ ed.Misiry ~ abk m swamp kd admtisagor Faic tasw,wMdrcvarsuslwm m<wnsumplion or sttv;a. Ow nsvlls Mrc impli®spm for IM <.ilinsms of admtising Oue o( Itx of~-Ummred <vik of edv<n'ning ek a1kgN powu m<bnge major ways. This seetion provido no evidma tMr suA powtt asTO summmiu, w< 6~d no rn1 <,id<mz rhm naliona1 adv<nighg inlivmm<ilhera regar<mnl<onsumprionma .ega4 mamqi gg gg j of gooda Simx x argu<Nar Ihee ®legnnm M GNp, psNcularll Nc Ian<r, em tne mosl lik<IY so esnilris euch,n inlluen<c ae en co~MUde ItmnoneofllKGNpoempomms,malfxedlrraWnarianeledvm~ 1 lising aM we on yro N ro wmm ,MUUSingdaislon rWm ming kaq pvarcs. ~ )l t aiNoriowlAdaertlauy Tn<empirial <videnavsd Ih<mAini argumena in <Inpte I rmdM m evpyon rlc <rinme: of a smbk urga reCro bNwem aol/ar aav<n E6S0 6S6I5
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5.955 0585 lapow NJ?a6s9W. v w swu!suw ay Wsw uo! 1 puwap ays .q pue qw uas!xp 8u!s!va.pe ays ,q Daw^sie aw l Mso!uu^1 ay, ,qw!ueW nl ya.(quwa H!^Ww ay iew anduyvs vqsvMa m^wei {nwP pW Y<v!sno yans p nWw! ayi atwqsc q apnsua aq ry8~w x pr.q Psw,iJO ss! q N!enPUB 8uu!w.pe W;P. wuU )1 ~wnlo. oln uo 8qqw.Pe p Ccedw! a4s asew!~c q aty!voEw! s(e.p Ww!s y ~! Ya!a P uo!uul weWw e s<w+ry w 8u!nua+pe ll •wya s8uu!ua.Pe p,w~w,us.aw wt ,q wqta!pw! vy qv p~nnv.aa po.4 e v au!nw•Pv x4s uatveens ry,ta+wyt cyt pue empoJ lunspvu a41. w a4 Pma+aiu+ sata-8qn,~u.p. pw!uto ays 7Vwn .,n!oEOU wprsuoa a^uea(P q NpvuGV+ BvouL i,F!otlo&p ays p pue 1u~ peP wu8uq u!vlav P. aey, Pa"+a%o aM'Fwuyuses uq W~ vivy~ w. wqt!puw auuav(p apun FpEOByo lo wrcsmwP a4y yw uo!suap eu!uya.pe v!esp .a8elvaW p[vieuo!lu ays swJGns os pryual!aDOUS IwwaB aww ays pue W.¢um u4~ ysoq'Deup awrs q pv.(iwe n+ xw!wp s[elsno ays srolle w^ p!noe 8umuaePe n! ie9 Nwnsse uuU 4'a® 9a!yn q lapow oerwu,noJ v ssquw au!s!uape a!w~ o, auodsv a.n!W am uw9a wo.esvdaa svu9 ayt Pue vuuay~p Wsav,,A;.(nsnyw ayt uuG^ Pu^ wsunPe p%aua.!svya ays udn NPUaWp sove. v!acawnwnDV tuw!~ao se41 Pa.usqe a:.'eua,t@um asqs upv~ 'ssub5^s lapxu no,aoeotaaP ay, w da m aauaya ays pu vlas 1^ P^al a4, ~`lonq alv uo!sla>p 8u!s!wepe w,aw ayt aq/!PUm r,weuFP <tl^) yW^ se4t Y!law! v,u(!eueano'+eiw!uW ut'o!tuc!weumiunpelunsvoaem,elw,uwm tu!WOUau e w~'weisuoa ve umaneep weuuD qqsv 1! yw!Wo ., u4s ryneae x owpuw a euLp We a!~ D 4Mq upu~ vlePno auuu ~unDe awu aup u laqu anpe q ~Wns n puv.wap p Fua .eta ayl F9 N+n-ww~ ae/ Fauaia)N s,aqsluawpeyap!say sw~xl p.vuus .,a/w~ ayt iws paw!W pun ,w.eyay aw<~w!tJO wmaJV qa!w +ain, uqv.aaD N•aaulo a4~ N~nipu! rynullul ~ey~ v-nFleue Iva4a,w4~ a4J. .9uwwnPep.GwyaalPay!W ye Wl N uaWq a as sa,le, s+tes-ewyuaapev! cauauy!D uupu s~Cwatep+a4wnu a Dau!wm+wys aM'sala,q!opJO a8epaua0 e sss . 8uv!w.p. reNOP 8nug apa uasoap p aw!e.a,E ays Pu1nu uy, .aPnls lou!Gwa p Wwnu a 8usmunD Fy nWe9a nys ueea4 aM o!mPu^JWut+^wwnS 62 'D!novs aud Ftoaouow se uauw! p qw ays oi sDUUJSV 8uuua FpGOa!w 1! We we~suoa va ws!ayep we+alv ay~ y•o!~u alas-eu!eya+pe aW /o Fwvuua+ ay~ sypuu Ppow e.u{~ aanD m41 u! a!YVJ o8 wuuw an Yua i!PUw.rweuFD uPUn auuuL .(IaJUBpo uo rqeul4 Fu¢ p{wl ayi vn~p'sa+ w~ p a~u a4~ 4~!~ +.~ loesum u, 7'(pEOUOw p wBaP Faeu!WO ays 11'.'i q wwenevv y~a!¢aytuospuw,Pq,exav^nenma4,wa^!nowaµt. 14_ +.^I.'i ' lr onyv wnu9!8^ W alawp ays u!p9u os my'a ow! a~^msyne uo ain4FpJouow p zday r.ueuFP+o un.-8uq ay~ se.Z awyD val /LOZI F!Ew~ /92Z1 suon~puw ww94~nba •avea (pJOUOw a41 ^t su ~~et w FqJwa a. ya!yw /9vn •lu>i.ot.J-a ddy ir !~qv wn!p!pnba ay~ ure~yo au'/ZrZ/4~!M .b = b Wa IStil suqt!pum wnu9!i!nba aq^ywoJ 'ISZ'Z) o~ lo!iwp~ Fyewaul s~ ya~ym I502) Y`l-~ll('J-dl°a sspw~ ny,'we~suw u o vayu •wnip4~nb> u! 1V>'ZI 1 J - dl -(~d - •W ~ ~plup , upu,lmslo wayi* ~a!9/un!i!fwnJ wW wo wayt 8u!ti~ F9 Nui°a ay nt m ay!yw t a. t enw ayi w N.cnp a a,ny~ o t. wP!
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-8a~- ;-; .} _ 1 1: l -_ _ - as -~ x- _- = I - - - - - - - - I SI - .. ., . . . _ . . _ -
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51959 0610
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Ai Ais m bdlv ancrih- d s <gy Ci.en Q,nc~fn S n<r U n '^fgxrt2t.x c r a osfYCrnJ~ rlJ/ nnJ /<L()^.< Ine riatn « b<cn ~ chnu ey.2Mm slhMdal andcnangc. riabk Q aM ~M1<Jxa/ rar abk r v<tgirmby cp. R.la) end (22JI~r m ro< hmn .n<^ tn< im<rM<talion d e a< tX< snaaow pri¢ or in<msM saln Rcnms tlar. sime ro. 2nl lhm r<duaa lo r=(r-CO)fl.-F.6 fL2A Tha~ rs Ih<~ePMopiar<ty nrylaliM mar~gi^a ro111 Mriod ev Su ~^B (225) i^ o ep. (2.22A w<onui^ tn<pxil'Mium m^ditiom (P-CO)IP=DIE•, aM AT/[(P-Co)Q7=^•/D, (2.26) wh<r< = 1• - FauF~. Th<z woxW h id<^tinl to Ihc nx<ssary mrMitiom in IM1< Dortmam Slona madd 1! D.<rc <qxat w oM. ArM a srn.nbk way rf qxamt- fyi^g Ine ^olion of morc rapC adjvslmnl is tM1n D aOMOachs one ss F, aM F, I^cr u. IC fur in w< ha.c tM1< simpk fmloMtt m<chan%m 12t0/.aD fa(ts to om as A i^o<as<z i] OltgrlrolyAdunrising:SrnNCCmNlswv Mon m^d<IS M Micing u^dm olignpoly Ihal yicid dmm^inat< oat- a~e bigMY aimplif<d Vinxm of i<AUStrim Modad^g aMiR m liled Modxclv Th<Coxnws 4xamnYxslift mod<I %rh<mon obrbus amPlt 1.17 Cria tM1<n %d<tmmi^N 6y thn totsl pr^ducv on nr all Fisms. ~wr¢ d which emiriyata rl.w%'rexviom lo iu own ompw Fangca This epprwA on be fwmaRy gmnalizM by iMUdit,t, sa11M'conje<mnl derivalivex; whirA lak< m(n -um nvah' anti- ciMl~ r<a<liona In Ih duolqly cast f n<mp14 ncM1 fmm murt nV<cution reprdi^g th< o0<Is rnM^s to eny ompal cM1ang< i migM makt If Firm A axums thal Flrm D.ill im:r<at< ib ox/Ml by two un'ns il Firm A raisb irs oulPUl 6y oM unil the <orrc spoMinB ronjeelunl dairalire hu a rala<oftwo. o. w< admn th< pa.nibilidY nfpmd^n di@rmtution snitilin, Ihl^BS baom< m<s.si<t I( a^ innms es a firm's adrntising bn a^r Men. A. nwss Is<rmil th< urm to inm<seln.ritlww.lowning Mim . a/o nlz pricc withow lo.cri^g saks T4it lalta al(mutirc raisc Ihc PnssiMlirY of mrrc ~M1nn rrc tt MeraJing in an indxary al any and, ind<N, r<nders inJCf^i~<she c^^cqn M nr indusrY. r TMr<arc, to my k~mW<dRt ~m gexnl snmris of Mis aM adrer indu. es Iing-r< sialed Moduc aM w< dr na M<s< om nerc galn<rathn aM IM1< n< m^dek a/oligolroly advcrsisin benanrr which lak<Mia ae <nog<~roux Sucn modUS ar<~ xnrnmmrn m she mark<Img lilcnsm<. u w<anow bdow. Th<y ar< iro^moktt si^a Ih<y do ml consdn Fimn' Mia ar ompup dcdAons. LogiwnY. mough, thry m<rm Im mmplna IMn t^IigopolY modeh in .hich selhng eaperMisurn a~e na 8<^^ucr'M Consider an iMUStry in wM1hT a6 frcms cMrg< Ihc samc M%; P. Assume IM1et IM1< hh Fifm's ultt, q', art a fmw+ian af hs ada<M1irhg mu.ogq A', IM1<adven%iip mmaga pmcM1asN by ib wmMlh^r; T, aM tM1<iTM<vailin6 indr~slrY Mice UvnB Ihe raletion cmployal aboss. w< n^ wmc IM1< lypiul fimia Mryeriod M^61 as If'=PyYA'.X,PI-C(y'(A',d',P17-A'T. (2.21) Sctti~g th< firas dttiralrc or12.2]) with rapa.t lo A' <qxal lo ttro, w< rM^m th<nttmary rnMilio^ (or maaimum p~l • (P d4/(~d~dA) =T. (L28) where (dA'/dA1 % to be uM<moad u Ilc <onjavoral a aM<~N r<spons ^f wmpniton lo m th< firm's sar<rti4ng" TM x<oMorda wMirpn for n ma~zimwn %vtisfnJ il me.giml Mo- dnction wx %nondeveasing entl ttMie.rt diminirhing mt mesgtnal to ed.<rt%ine. m th xns IM1at the sttoM tem an tls kR o! (21B) fdk.llh M. W<noxd<firctb<fWlowtinR<lasticni<s~ a - (dd/JAyu4dA ~ - (m9daqla4d2. a~ Pn tuP+RS.'M1%h remeaMeln.em ~ne nwmpory W dkrRV T~ua'zro..~is.,6k..rnrn'uaaw~M1. 0850 656Z5
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Jnl M1emvily +m mia wi+h Jnu frnm p 119M1C1 Over +hc i+M 191ti s cVnminns cspl.imd ov<r gtla16l+i:e v: tt in s mJvcn sinR sMnJinF In n 1..1, a nalp<J in6 in ~ohrim~ anR~ m IM1<rrm ip+d+fon + nlhc pcriod s1934)G A pmc<pof dcman o mr nmsctlwlqY nn sahs xnA xb s<lungc aan mcd for IU% n adv< eullays in IM 19pBM p<rbd vaTFn eaxrAraues xhe n +Mx bust rn bli ruks o1lAVmb in d«Ming Fow och to adrtt u. An edmnising-seks uknM u am< and managrnxnl zrics t <a poss. Adv<nisin6 is MI in rccasionz cvm IM1OUgM1 (nm M1avc idkcaMCily. 3,J Th<Nnmrenf+heRadv<e Elu 119661 a mMN + enMain diRer< n rM1e adverx -mks s or lJ consvmn goods iMUStrin b~xh< UK by diRa<mc in xn<mn a( xpr<edinR informalion. He arguW IM1at +M1e cm+ would bc low relaliv<zo saln wnrn Ihe aMOivp Ind or u1a e AiBM1, ain¢ IM1M ean be sMCed om ova a larg<r sala volom4 axW Aip7z whrn IM1C numhcr of wmp<Yng bnnds is kgls un¢ morc in6mulion mu+l be mnreyad. n lag-limar ugfasbn eqwtion wi1A saks aM nambtt or p.nau<p as irdepeM<m qrubic <xplained 12% of tM1e rarnntt . No n adser~ism6-s+les nlios in IAC sampk in 1951 aM 6a e in 19, informa+ion on +M1e s:gnif ns of xA< suelf 'enp. in tAe rcgrmion ax pr<arm<a.r whil<M1hualiui®IrnMrsartsomcwhaxp<nm v<.tMlogicmW<r- IYingElsa modet <ak.Thea mxlhnttM1emsxoredvMixing an be sprcad is baaically one of aonomia of sple aM does nor mpelling II zuggnp IM1at xAC oMimal Imd of adrcrtisin8 for a rsm a<ismds oMY on ro<nnmbtt or pmrnrial cnslom<ra and nM on +IC k.<I nrsaks, a avggcsuon wNCM1 k 1momMUbk w/M Iheempiricsl <viaemx diuussed in tM1< laz, scttion aM wim tA<thwrte®1 aevaory mrnl or ma ,<ax or roi. cnaMrn. M m.wpMiea ~hipk mrrtx.~nne.rt U. e -.rt.helnioly iaomiram..MSe+h+.e mnum b. IsH .eyeu iM++h Onpn nm M+bi nmmM d poeno wmsic.m:Nq+Nf +o FunF<r, flu's Jeve uMly well inbrmN aAnm MI proJnc )nlyµl erBv<slhm<nJ.t< ing omlays vmry Jir<cJY w M1+lu c p<M Mendi~ bfnrm giA:v omMion,th<argum IlhalwM1CncossofsM<adb8 uM1igAlnz n<yistl<voudlosprcadingil mse9vally 'M ndvd< xhaz Elu: Mpcr olfcs lirsk insight oln<d<+m ~xMadve .ingin sily, intAnomb<rNanlAOrsFasemuBhlt urclF<impdMpmduc cM1araderirtios on advmlising wxlayss Kakie U9YV/ argom zM1m advtt, eing wn be eapxv«d lo be M1wvier for +uw IM1en kr slablisM1M Modocp, aM mm whm rlx uchnology e anm xhml rcw prccix daims ror IM Moavn can bc matlc, adrcrxistts art forwl so <spmd mme momy m gd In<ir mepxg<amoas. Balh rAes<hypoxhvm aumppmlM ' in11Y. usin6 mxa br 31 <tM'nl drug mmkcp in Inc UK in 1965. s1a~Yk 1196gb1 arguc xM1ax adv<nising is mpvior b dirttz ttarch afinkmu n for bw-pricN commoditia xq Jxh< iu nfa mmmodilY I, bwmovgF.lh wsl orany wr<h rill omwd8h any pouibk gain. H< alm suggnu xhal adv<rlising n hs elh iu fm frcyc<mly pnrddaud yroduczs sin¢ habilval Mltmm d bcharim d<v<lop aM xina lipk zhoogAt n Iypn11Y givm w breM cM1Ma civ<n pri<e, avcraga IrvuAmc ruqnmcy u dlrttYy r<blad lo dollv vha volum<, m Ihis <usoning suggsls a negstir<saoaazion bdwxn aavcniain6 inzmsiry nM mis vMVme Aofdl~ prz«onsxanz. Finally. Doyl< <xhibits Ogures fm IM1C UK whixA, Iik< lauram'x (19C96) dmn lior xh< US poim zo mocF Feavier advenising fm non. donbis Ihan t dmabk gooda He suggap Ixn eusom for tMa. Ihe markd for many prodvar donbks e so spccialimd xhax m<du advmisin& <zaq in sp<r.ialiud xnd<pnblimxionz simply docs swl pay Secon4 sins a fairly Iarg< nprndisurc aM e Inn6-tam norrm n deuikd til lvcd, buJers of durabk 8oods was brn<maonorthe nxro aop xMt un bcptt be provia<d by aalamm xMn by mMia adwnisbg Thi. reaaoning soggnp Imt. xl<ria Mnbw. x+ adv<r- ang-saks raa« xAonld Ae 1- fw dmada tMn br nondurabis In a mvllipk rcgr<vion nWy involving g5 mnavmtt goods bdur ''n tAe UK b 1958, all x1- hypMF<s<s au wnfimxd. Doyk nk'bYS a log-h'n<ar r<gresaion wM1ZA esplains 59'/ N IAC rsruna in xhe adrttliving-ssks raxio. Thc wcRCienls Mpria, vb aM a dummy ELSO 656L5
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51954 0611 11
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TM Rrar M rM1Cx s tM <I f thc firm naJr< singrnexecendm rirYmmmr<rir~nJr< <ng ana ~rn< rnird i: mn;«mral~<. a< <las alr. n m< tn< r<ramaB< <harrge n enmpnil adv< sin6 r<+rened la resnlr unm ~w pcr«a n rn< rrm r ad.< Subniulin6 rhese nrca(2EBL we M1art tFC simplerr<sul he Lmmr m<amrc MIM1e degra ofmorwpnly. Eq.12E9)rWuea ro RJk the Pasmus.un r<su1G whrn 2 6 equY ro zern In tGis ~< Ilre frrm n a monopMisr. and we oa caped it to xr L' = 1/E tbus yieWing t1e Dorrm.n-Srdn<r solWion. <q.12<I. If K= g./L39) aln loaks like IEJj Ws art 6- J<aling witM1 an olig- upolist wk. anums hs compnirora wi6 nd cM1ang< Ih<ir adr<nising The s a CoamW~lik< modtl of adsenising dmm~irmlion Analysia m erd wim t2.291 in rnsox, sins we mussamides the inr<nnion da numha M sucM1 f.rm in IM1C msrM u dnomire ardliblum To 1'r rM1n apprwch mor<AOx1Y witM1 thc lit<mture ard lo obuin rnigMZ w< xryna Ihe erastirifin d aM S' imo tMal alc and markd abart rnmpomnrc I.n S bc Ih< markn aham of Ihc irh Rrm. and dmot<ro41 irMrmry saM by Q'Ifinr ir'n uaY la xhow that simc Eq' EQ f5' E. A Ex Ei Rbl riaM<.v. wM1erc rM1e eapmion (Ey/Ex/ e IM1«laatitlty M tM riaNeYwilM1resp<nlos.TM1efins onlM1edghsafR.3%'vthus rhe da.ricity ortmal indumry salm witM1 rep<d lo Ih< quamitY a arM IM1<serorM tmn is IM <IaatidlY o( markn slum wilh rsp¢t so a. muM simply apply tbis rormula u sh«Iaui.isie d mM d', bm this rroWE aor yieM mucM1 :rvgM. Imwd, w< frrst e<amine Ne <Imicny of markn shsm wnb repx to adrprmog az ir e uttful lo analytt the Wamity runM1er. In tM1C static witM1 faed uniform iMasrry pria, is " smsibk lo rdain markn sharm m rcWrire adrMising In gmeralL we mey wrire kr tM hM1 frtn in an N-firm markd S=/1A'N~I9A1. Rlfl. :850 556Si wliert /1a/ may ne mmrgbr nr as rM1<'<R<niK aJrerndng rmalfrng m rM1e rmc m qare n4 ~n<.uKx ny firm rmOnlYn t<wmrm Mmewn a:PlRlhe nrpearcfimlrclim Frictlman 119511 <aam'rn<J asnumM1<r uf moJds in whir.A IYA'/r~rpa'. 11<comidcrM Cournnl <waibria wnmc rMal aala wcm unartscuJ by otal adrminin& galign anJ gicharu(19GE)enerMed IM1ia modA to the <ax wherc indunry sslrs wert aRatM by induslry adr<nising In n dyrumk moCd, Pcckwith (19691 mmidttM /'(A') = k'A'A whme k's rc th dfenivcrosa M<scM1 !rm s edrtttising mpy. He allowM oal sala lo rary, bm w r<slswrtt to adr<nising Milh 11961) rot<d IM1<uu wMe IM1e tlanicitY af elfmir<edrvrnirrg wilh razper.t o edrenising m<nega was nm u y; h< assumd 1'IA') =(k'a'/, wilh'<' e pasilirx comunt rrM nv<varilY Rail to wre. Milk allowcd olal mis b vary wirM1 taul adrensing bm h<cmrNdv.d anly CoumM ryuitibia ahere no sdv<niaa aV<ned rnalurion. Ku<hn aM Wdss (196SI propmM n madd in wnich f(A) = lk'CY, whcrc IM1C qwmiry C maY be dlher the ilh frms goodwill srak, obainN by dcprc<.isting 1 ed.ertising oudayz or crrrms adrwising spending For salYtiul <onreniencc, w< rcquirt symmnry in th s<me Ihat 7YK1 = 7kK) ror aR i.l aM K. Waan Ihm rimplir1/2111 ro TTn 6 mom g~ Wn Ih<mud<I tlmt kd to (229A sin¢ Ilr<JUtr's baion Mwmpnilirc adrmisn8 ^urtcu, as wcg u lu smaL Lel M' be Ihe hh 6mi s ah.rc ol totd irWustry adreniaing. ma In a bc rhe <Urlwiry of irrdunry aln, Q, wi1M1 r<spm~ to IrMUUry adrmis- Ing Wa ®n Iban usc1EJV1 rn scpaule d arM d as lonowx: dmaM'a11'-51 R.IJI M'1-~15! whmc 12N) e' a f1A'I A'//1A'/ Thc quantity 1 is thc dasridty of rM1C hh frmi cRMivc adrnlmng widr rclen u purchnssMadvcrlising m<xugcs In)2IaA N is assumN Ihatallmmpnirorsincrczseth<irpurchaxaoradrerti6ngmessagmb> th< am. p<rcarcagc Mrhdr odpna) rurchaxx
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wMndau rtg<n< .al tyua .nlv< m. rVpmedalags,M rlv s m ar< or nrlc u making ludg<me ahour rM r. <cnosc epDro M1rMpue. naMnytc• ninB'Mim1 f adver sin8 on cnnsumDrion in ~Ma<onre.r of wme sraMard con s. In pnicular, rM followr g equa rom werc mn marM overolMrperiad 195611 196) IIL' CI CONS a A°+6~ Y+FrCONS(-I/+bsADV C.11 CONS=b°+b~dY+hrFry-I/+bsCONS(-II+h.ADV C III CONSY+hr W+6sCONY,-I)+6.ADV CIV. CONS=h,+NdY+SrY(-1) +M1r W+C.CON51-II+bsADV n tM1ca <puarion. Y is Da ®pira disponbk inwmc, aM W u p<r tq born in do1WS, arM bmh ddlatM bytM mFhid amnM1anr rorncr ld mul wmu mDrimrwortqmDrimr nDmanuma Th< wamilr nY 's (r- YI-II7. notn C ane c wcre uW mr CONS ard mrc xerin re urd ror ADV:.t(-I/, A, arM A(+/}< wcMOtlch C I aM C.11 arc nandard consumDrion funcliom or rM sorl rnal flM tncv waY in menY 9wncrir maa*occonomnrk moMAS. MoaN C.II was popuYriaW by HourNkkc arx/ Taybn (t966k Modds c m,M c.rv ximDlr ,aa wmlm mmn w tl- <pu.lion: ° sinm moaN C.rv az ruly signir m impmvcm<m n modd c n m moE<I ul I, w<ao nw aiscun a in anan. An ~- tiorttd'm snc rcat am prnmrW in rM epD<Mia to rhis clrap er.talorg wirM1 tM urociarW raUtinia Cmssumprion e a pan of gross rrstiorvl qodun, erM disponhk iis dn<rminei in largc pan 6y.na wrmwt<e puim Nox<q wim GNP. Ir hss long bccn kmmvn that lasr sqnarn rnimsra of mn- umrrion runnionx rcn4 6<vux or tne xrmaurc ro ovemtimat<thc <«Ir <mam<omGr°conr<prr<nnr.w<r,ndnrimo-rrm<nul."N.waa ro r<daro r m m«ypanom ano.<. ..4a raei wcF.M wr. aruur li rc r rhar iltt rcarymJ< l ^ ~inn aca<s a,a n nnrM1<km cci<Jn w (dy<reK It D mi°<d. nur o rnc o ai~fiar <ahh. n dcDCMsrynn .Jjw valun of GNI'. IoBsa rnJ gen x. Pca ofriM1isr modelx aml<CIV we mar<d I wirhuwe <ared a preJei<rmincd arM on¢ wnM1 W rr<sl<d x ndog<rroua w<rNV m IM s ofestimate, asC Illa ane C.IVa, end C.I/Ib aM C.IVb, rnpcc- ively. wnar lollows, wc ux IM mmlurW surMara crrurs m p<rform rs of signifi® <z Ir s ouN be undnxtood thal thuc sm ra aM only arympmrinlly valia. Their utt M small ampisrisjusrined ' bYrcu em rrani¢ and n mrM by rM1.: ri<M to mak<dcisiana. m< n.,t ama< <y,alinn r« rr <mrroyw .<onsun~, rw<al nmr- Jcr<nr<sanains <aron., arra rM nr<.iom w,rm.a a~nains nn nm,- residentinl xt ra. All rnne p rcssW m dollers pn ®pirauln additioq a rimc rrme, populal on aM tM p<d el rve nank of New York disrnum rmc werc prettnt. All rnc?rNents wcre largv tnan Ihar ntinulcd aandaN nrora arM tM ft' was 9915. Thc xn or frllcd valua rrom rnis frnr romott nag< <quar w.x uail ax ,n m<mm varybl< in an <m,xumqio„ rmr<tion <nimara m nrrm,rn rnal lamw W <naoecnom, w wa< r<qa«e n rFi lisr or prdanmm<d variabin bY IAc n11M nhxi from a frst slage equariw witn an Rr of .969J. in sddirion ro IM vara6ln mrn- ion 1 abort, rNttal dcf apcMing astl IM pmious quar(n's aDmdin4 sm prod=is dursEk <quipm<m werc uscQ.born «prnml rcnl dNlars Da npta. All cocifrcienrs in tne first nagc rcgrnsion <rc largcr tnan rh<ir naMard <r w w< firn <srimated an consumrtion <puetiom .itnour sdrnlning Nabka. All 13 stim.la hed Rs'<.bov<.99. No wnsram rmrn.erc signif nt In tArs om arkur comperiwns, modcl C.IV nsa a M1igMr xrandaN error thm modN C.111. In Inc fourlh (C IIIb v,nm C.I VD rilM1 CONS = C/. th<fall in (M mm of squard revdwis obtaimd wish rhe <mndi®ted modN waz rnr signifiant at Ihc IU`/. kv<I. TMrt seemd lirtk point in wmiAering madcl C IV funhn. ,rM we dN rwl. In rhe Iaal <omumrtinn equations, tM redunion m waplamed n¢ ablainN by nqving rrom moaN C.1 to modN C.II was einni- r~mmartn<1%Ie.N.wh<tnnoMVr<r rr,oeacmmmoeacu 0630 6S6SS
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g art«I, assr<sal<.r<nJmg xaw x<m: <arri<d:,m cndY abYa VcrJon w at 119Ex1 nnJ Fy F.41und xoJ Gramm 119n9A TAis ninvagminnMlhlsM1y(r:IM1wv.e ~onnnca~o(iNV sl dar ~M1al gov ni pvrchaxs of goods aml ac x'e~ ao y in way wilh mm0al adv< sing:lhc buJgel d<t<rvar svbjx any forca n ongm Ihan Ihe nuMic relariom ads o[ aeroslpa frms.o Tdal nmatc buainess sprnding on plam and qdgw<al maka sentt e daired dmuna. Th<diwribwion or salc emong prod 5~ nf iFese goeds msY wdi be innumad by advcrlisMg u thne wmMlc (or mart<t sM1arcs. Bm IM1C tM1<wy of Ihc f:rm df<clir<ly ruks any innvcme N aggrcgarc adveaising d nlam aM eVVipmcnl :wmy-wNC/rvmhem d IM1CZ pradvaa To tM1e <ntem sFar M1< aniaKOm tn aa.<ni.< ane lo n pum ane wnilm"m ar hasW on ~M1< sava aala aapectalionz rM1ert mry w<9 6e a wrrelanon belwern in.almml aM adv<nismg wilM1 bdh bong M1id: wM1n <ap<mcd Itt M fmal gool arc FgM1. Bw rw dircd rausal ydation 's Ihereby mp1iN. a IM1eory pcrmils m lo rvk aa an impaa d aarwtisi:g on in- m Iwvsing anmM1a GNP compmrcni nm mox advMis mg d hvusirg s Ivwl ard doa :wl show vp w Ihe relional fignra Th<rc art no qmrl<rly fgma aveilabk fw bcal adrcauing spc:d- ing kl abrt ror Ivnl adrenm:g d ncw' hausing a:d w< lu.e m way d knowing whwher iorsl and :a lonal advmuil mc highly mrrdatM so mvst drop inv<slmm m Itoosiy Iran funhcr miacra MTFisu~ampbnn a:sdrctcapaasulxecomponmisdcNP ular me russiNy b< Eir<cly mnv<r:ad hy na ronal aavanising rW al npmn anaimY art nos arteaed by a sfiang in domvrc aarm vin6 F•rm^ Ihc argvmmss above, d it uMikAy nal iminns af raw nals, int<rmediale sovds m prodvar's durabk e.qnipmmt a Air«Iry inllurncd by advmisi~, ax an repramr derirM dema:Ma Srce il e Mrd ~o mmryt <xa<sly what Faclion N mml inqons r<prt- umplion 8oods aM si~ totai wnsumMion m m~ch Iugtt tM1an any r<amnabk ssimme of (his paanlily, it s<cros dor Ixsl avr rocm mmt be om -nmpron expmdimrn. As appcndix B maka ckm. ne haae rdiabk qvart<rly dala for nanonal ad.cnixine sprnd'mg in ap nujor mcdia from 1956 rhrongh wilF garJ r:gnr ar meJia ( < mns onsNer only the pcriod 119561961 in ovrnnal arlicrYSelicr of yaJr<rti ng aM zmumpllurt In faft we cmploy on1Y ihe pviod frnm 195611 IMVUgh 1961111 in orJn to npcrimcm wi~M1 XaJa anE lau in tlrc advenising YrLH m rrcu nemin<the cvid<mmt on IM1C M1ypolhesu uMtt nWY shat is pmvidd by ximpk corMalio/m La C bc pv wpit. coawmption speMing in 1956 doilars, and In A bc ml aavcrtismg mwagn ptt api1Y where nrA ms<sg< e valuW at its prla ia 19W ° Ovc tlr pcrivd 195fi 11- /96] 111. wc obscrrc Ils fdbwfng mrrdetions: o(C, = 96g pIC.A) = 9]8 dC.M+I))=9gU n Ihe x .argue Ihal wnsummion of urvitts ia nw <iatM wish much nationil ndvtttiang Mon urrirs art <ithtt adva- liud r<ry 611k ar art proavad aM soW by IuW aJv<rtism. Qwnerly vsilabk /w Ihoc compor.nts d snvias asmump( . mNUpnrchue5in/milylsanepwtation,thetartadmtimd-ionally. Is seema aPPropriale thrn, b ensiyx lhe rtla/ion bdween adr<fluing aM aa~nnma apmdin6 on BooQS only. u wen u Ihe rNarion bawem edvanivng nM IWeI auwmptian apmding La C b<mnsumption speMing an dwabk aM nomdurabk geods in 19% ddlars pv <apiu Bur tM aame pciud u abovS ae fM thc fdlowing: Ac. A(-tD =.9]z y(C. A) =.96s dC. M+ll) s.985 ThewaMzadcombr .rennhigM1erm.alhcrram,bmahe yatt<m is thc ume iv 1pth. ReJ aErenisiag ia thg rcxl qusnn u mnrc cbsely wrsn4ld wnh wunmplian ,n the rncrml qvaatt Oun n admtiain8 lau qvann. Thh mggaulxat ®vusion rvu from wn- smnplion lo aCv<aising R'< nmwl, ho.<ra, rvk ovl an impa of I~W adsqlitingamm~anmpt~on:acorrtlalinnd.9fi9'sbyromuns M ry~:ek.'m..~Re fimYw w::e hpn ia l9r9.~ ~ 19JMaMtt^ ~Y /xqp:Mxain I955. .. awA. wd~ dnla:m y ra<w.:es~a„A Cn.:m<, p.,.~rt.'m aw.nl..."°wr 6850 bS5i5
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mc JeFare abom rM p eRcirn of fnn ivN in su'Jr n .'tlrc ssoml, m rclfunJamcnlal, mahwellanre isArougM1lomb<vr nadv< ~aeang<s in na.< w n <ma <ha aaa to.arar<TM1<,a uc in<n hn<rnm w<rMrrg<a nw ob nr«onnmi<an.y~. Fasw on m<asmmption orr.<e pr<rn<n«. < or hnk urc in d<aling wrlh such anrnimra° arrlnn lh<ioim supph argum<m is <ign+swnt primarlb in siruauons af kv IAan rrtt emry. A. St<irwr (1966, p<13) Oms it:'W<art all asomixlitin as might Aoo: so fwM1y ulkra m m°rk atlnrrve in order <irner nnatt<mpr to increase 1161 sMre of a mar4cr ise Mrri<rs lo enlry af new firma Thry may, in aggregpta aixrd m odrvrrisinq rMn rF<q ran paxr nn ro <onsum<af.i0 Only tnc ¢ or m ry Mrr a permn rrnn so betian, ana unlns M1<y o m A M1an.IM jw suqrly a mr Ms lita < Th'sof as adve s n <rt<vts welfar< merges fi a Inifd all<gedron ra dvelng by alignpolist rM1 Marsball 's (1922) dis- wefilyl TFk a.ga men < IY<fi<'ean wil wn b<Iween'wml uaive'mM 'mmAnlive advwie:ry. WAiktM ss d<uribee u convepng uscful information, rM latter was ~yed u s<cially wareful wmpetition rm mark<t ahars. Many lo Mve clnrgee tl¢t mucF advcnisin8 in indusUializetl ecmwmin ur<ly'combnlive'. Or, u Auan CTase 119E5, p Ill/ so viNdly pus tFC cM1a_ 'NinrlmlM1S and morc or adv<nein6 K hrgely com- pelil anglin8 ss to rM1e r<lanrc mmts af two indistinguishable <omlroond:. Thu Lx ol n;li<ism in na <arr<m<mrm says tha'dan srms hr mosl oligopolislk induspi<s wouM drastinBy rMUx In<ir adnnning budgaz. rro firm i sala woule b<ailercd, aM saaay wouM Ac bntc oR In rM aa d iMUStna in wFi<A tmal sahs ao rnpoM to roul iMmtry adnrtising tbe abon mun be re-phrasd to saY tMl sociny wouM be better oB if adnnising were rNucad ro tM monupolY kv<I. An aFgopoly is Atld to dnnise more Ilwr a nronopoly watld bnause EmN+~. wl~sss. ro iv iul. romabry w . -rM mar mn<n o 0 on °anrri,~, nm~ y lall wn .m ro This 1ix M r< n on Ih rM co m<.<rr nwn~a amaa~m<an<1 raampm,m r,a <m pnmm~ .ne ot MrM1creAr inbnsir Mr rorms or ri.ahp B<M lur dInia on aoa rrm uc<ssarily implr menopoy pmrrs: xm Slisler (1966/ nrd secrian E> Adow tA<w<Ifar<argrmrnR rAOUgh s a~ cunp<rMion througM1 advcrtism6's a wasldW way d rWaang proflx N<m empirinl invatigmion shouN M1an a gnod dml b cumribuU. Ir dcmaM amlyse revuk tlnt tM1e mis da pnimlar iMUStry am mi slkctea by in wW advMising, the frrrn tMrcin would cl<arly b< b<na oB ir aavttlisine w<r<<unalkd.0uc ®n alw srgu< tMt mci<ry . whok would be berte oR, on lM gfomrM lhar sina edverlising don nnt aBa ezpeMnure panttns in Ihis m il don not ebang ' any imponenl way. Bm sina we M1sn rw way of rclling wMr t. of sare <hangn a imponanl 'm a welfart sms<, th's lattw aY thelisanimspecnlative Wms m induWy arc ad.enniry mur< Man a proB> miung morropolisr wouW aM iMUStry sak: arc iMr<bY alricd IAe sritualion becomm <nn mor<mmpka CkarlytM firms wouM be 62kr aR J eB rronM rWna adrcnisin& bn aav<nisin8 n ob.inusly aRaling <ongum<ri raates, aM a rWUClinn n W spmding wouW iMua a aiRwvu-to-vatrr ab<nGOn in prercrtrrces. (a) M nilirism we now ez mine Av ofkn bem ralkd tM'HiAd<n Perasud<rs ilwais', afta IMabstalkr bY vanm Pa<kard 119511 PacMk3 original tAarge bu bem amplifM eM eztrnd°d 'n Ne rrifwrg d GvNniU (1958, 1961q lMSe authon ud abm M.e arguN sMt b®us advennm6 inBuemn llrt fmmation dmmm~rm' wn n <m inlluens spmdirq daisiom m majm uN nrkesieebk Wlrcrcn b<lore wednB wdth sAe cMfge tMS adnnising is employd morclAnarAelustiFedbyeon n'rnponztarLMesM<M1arge n lM[ <vnsumr.r responscto adrttlisirrg is in ao grat. Thac two argummb arc pbJampAi®Ily A nM fmmallY nppos<A. Thc fonrw e al il. sarongnt when adnnising dos rrm mBscns indussryY wide demend nry &eadyah< latlc is moG persuasin wM1<n d<mend tan irdmsrys pfodun das rtapnr-0 lo Br<mdusrryS adv<rlising O/ x a msc mighl esM whcrc advmsizng irAU<mn an iMVnry, s L950 556i5
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.rFCm rcdY^r :,~,Jm nu~JP Sim 9RSF1 rs ,mN tlul saln wovtJudmYJ<s illy ~slrc uMCUa IX nJver,ning, ignarN aJ sp<nding M mmMli:~nn~ anJ dcrived almmul:, (or IM1C profmbilily otdlfkrrnl l<vck of rJv<rlising. Ka<An IP1Al1 aml bcckwnM1 IIY691 also assumed wM1rt amounls lo -ial J<ny o! sal<s. Tircy ~aok tAe sia< of Ihc markn as f,xc1 rda1M markm sharcs m advenising shar<a, aM esaMnM indiridual dttision rulo aM Cournol equiAbria. 8aligF aM RicM1ana 11967I also ssumm. ms~oraer adivnmcm mecnamsm, rMugn rA<r allowM m< loul markm mvary withmml ap<nd'mgFinally,GOUid119]D)consid<rcd wo fairly <ompf Id mccnanema fi<assumW monoply, bm sina aid nm ailow przing m be inllurnml by dynamic <onaidemlions, hia moaei rouM be thougM1l of as e moatl of Cqumm adverlising wi1M1 „any gi.<n pri«. rc gmaal meea ororgepoy ~arnamm<o~a~mna.oarau gpa W am<ebrinna a~a og req. (]lal: aP'(il ar 91 (2.19) As in IAe lao uclioq w< lak< pri« ss<aog<noualy deermin<d Thm mc that P is a known funmion of i and, wm<PU<nlly, i1,rcN raMi=i mm<rw in whm r Rnw Av beler<, w<Im r bc IAC rcicram dismum ra~e DroM~ing Inc sulxr mipt 'i or menien«, rAe problem fadng IM tYpi®I fiem is so choo.a IAe function AIe11M1a1 masimize rM1e presenl dittountM value of prolr Thc IlamiROnian (or Inis Orabkm is ff = LP9 - CIPI - ATJr"^ a Ive-^I IF(9'PI)12M) TAe inkrprcmlien ef rne dual variabk a is aa bUOrc. rA< n<.,~,n <onairona ror a ma.imqm or u< pr<.<mr a:.wwrw .,1« or prnrn "ui.< rx <:isl<n« era Pi<.rcwi,<<onlinnou: rm:m:on A(Ilsuch IMI (a) Alrl maaimim N al all paima in limc. all Ib) alar'^J = aq. lim ar-" = o. (dllim9vr'^=0. Scvi„g ,M1e r E<nvmi.< „f lE 01 wnA ralxs'I m A<wrl m mm, we nMxin -t+aF~ln'.a9.lUA/dAl)=rtItAll can tA<«Dr<s ,n Ma<r in 24q W. Tfrcm m~dai for 114 II to signal s maaimumof IIi0) is Wr 4 F.u 4<0. wilA al l<ml „e oflh< in<qvaAlica hoWing sxicay; we essumc Ihls condilien Is saliafrca conaidon (al M1m implie that RCIJ Anlds m an poims in limc This ryumion may b< rc.wmrm by dc5nhg clastiasia u bdo« u AT - aF, 9•Iv' + -a•P) (2.42) All sb< quamitim In Ihia equasion <so:q T arc uMerssooa lo Aave supersalprs T. TM Imn '. fm in n Ihe long.run AnKn1Y of sne rA or lyqul fir,n'a ub wilA rulpeei le ilseompmilori aa-ng S1n« Mi+ug e,wl <apliaay innu<- by dynamic wnsia<rar,onx src do mm nne Ihc conv<niem symmcvr Ilsaz Id us ro ryumian (2.2t) m In< mn,wpoy a<. if rAC ecgoldia pri¢ polky n suunroe m b< art«I<d by IM1C dyvma orsle probkm rheugM1, w<®n go a rnik way n tne diraYion. In she monopolY <as<, IAC Grn d Ihc nansary eon- diliom13.191i; P = F, E• Q'/Q Ir rh<Migopoly msinmins Mi« as a cmnmm rramion. K, arMS nlu<, w< an wmLin< Ih's wMirion wirh (2421 ana oMaln AT (a• + ic•P) P4" KS' and K<aa bc mb<mood as e sen ddynamk m®svm of sM dcgra or onopolY. mns m sAe menopely maq wadiliem pHd) <murt maaimum prafil E N ia a mnn.e funaion ar A aml q Im any v aM c This rcquirts, mong olbes Ihmgs, Fss 4 0 aM Cw ? 0, wilA at leasl one ef th< imqaafnim noaing arinry. Simihrly, kr rAC tradadc <aae wMrt P is <enslsnt aM q• doe depeMaqieMy m l. IAis 4uer caridition <uuva M< esblma aM unpuesuas M a soWlien m IaNdlTM a<gummb vre r'vrwlly 5250 19619
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. "'larz rt r M' -.IJ< 1 rU A - 1 d'. f M1. .......... 11 ' n< ' h n vilibrium aJr . F dni: r r rclel on 12 <64 w rich wc rc wrne M1erc for conven entt. i.p-[:Fr,] LrPCJIo•.anl u.n Ile.e A Jemm~ rM1C nvmM1<r of adrcrlisine mersag<t Irvr<M1aud bY rAe m.rlACn~orr.cM1m gcQnl sakxrtMnriucna.gN.and cmasina LTMmmondrclenoro.qnmmlM1CreanMJOlkr sing to dollar aales fm tM1C firm mnxiderd. The firsl Ierm on M rigM rell<as sne Jynamz nalur<M tnc demaM funaion. The vari- aMc r n rnc ra <of irr , arW F mM Fr arc tM1e Iwnial der'rva of dQ/dr wi1M1 rezh<n to pvilibrium vln, Q•, arM a<tuai min. QrTM1e mP1Y IM tnnn mwsorc of morrolroly. M1e Quanriries n' a e 1M etani<ilia o( Q' w rnrrea rn c frm al adre rin& AeaM il atlvn sing A ad~ lsin6<ThC nn ai16e mescM1ed bY a IU0~9% iro inn.i sn is a mnjmvralrez YAMrtienbrlYin imgfal rcof1Y.// xwnmalaoll< nnW<s.narwlrulpva rolreJ: rhe o of do l a dollar ssln does nol d<Mnd onT.rneprittoladve nugn. s N covrw Irvc snal frms do nos know wM1al aks thry will cnjoy r rnrAryklconrncnfaradvnlninBaMthasadvttlisingemnmilmenlz rwl Mrfmly 11<aibie We anemM lo upurc tiwe PM1Cnomena by cmploYrnB rAC Cagan 11956/-Nnrbre1195ga, 195gb1adaMiw exlxc- ons-panial adjuslment model. W svOMSC IAat fm a&van frrm wrget kvcl oradveniaing rMMmg A', ia cpoa to wme connam k ma aon.r saki S In ail wan<n On Ihe acwmMion IM1aI lhe Meriovr pwn<rz zrcrMin& AI-Il, ir vsA as a BuNe w Ine appropriste k.el o slKnding in tM <urrrnt pvaner, we M1ypolAaixecM1al . -A(-1/=d(A•-Ar-1)7. or A= Idk1S t 11 - d1A(-In wn<r<a is a ronslam belwem mo.na one nary czdmafion anuminE the adjuummt mcchanifm arW rro~YSt<matic <nengc 'm th< iargn advallsing-seln o.4.w rsM1esryeAi.fedivzunrnrfi.i.rne z nf.r ren whn M .'I onMin/lve culJUUarMnpnaJveetzrnE .arysyn<m .eny.l ersM1OVkrc niM<rhallM1eraoafadve cNP m orner a otal v Y<'b®IIY. Ir. rm inavsnin Iln~ adreni.~n<ro..dy arc In< mnsl <y<IiunY ttnsir.<,nw< wovW frb Iba11M1C nlio of advenising ro GNP movex wisn rAe ryde. Ir iMUZrrics xMm do roI aavcrsu mudr arc tlx cytli®nr z<nntiv< on rlc mn<r nanJ, sn< wrin xnnu mo.< agnino sn< <r<k wc mM ro uMur<IM1's nA<rromenon by upsrarinEGNP inm:n variour . mlmfromnn. The modd we r<laln mai n rzmal advtt nina lo GNP f I dcmand wmlw entz. The main «ason ror IM1is avvm sA ir IM1aI Inneserxsg<nenllyrcpecenlnvs zakclntM1<cawofcanovmMion p<nding thcy ain fnal saks w conzum<rs, saks wnicn w<tn bc 'alnl wisM1 lar~ a nn of nal onel sdr<nizin~. Ndallbminns ksarcirMUdWinCNP,Mxe ..galaMim<r- medure Moarr<u rws ovmrd Ilvl .rc sa exM<i sM sals of inler- mediat< producsr lo be rairlY s1aNY Netd lo fr 1 sales ac musured M IM1e natinrsal faounn. Thiz amnvmx ro Inc auvmMion IMS snc degrcc of rviol in n rhe xon Y arM Inc aMCrlYing inpmousMrlrelaliamlhavesrmtcM1angedrarydl9insn<POSrwarpcriod.'r In anY ose, IMe is litde nvidenm lo zuggest heavy Nveni.rvn6 af mµcrrneduleMOarrns. rclare cvrruu adlar advrni.fnE to <nrzml dol/u raka. n dis- en.aed abere Asnrding to eq. IJ.IF IM1k reno is tAe mml M1kelY fe be subk rm Ankvbr indmviam iM Ihewy aevelnPed in <M1aPre 2 aoa rwl rnggns tM1e Mcrnsml prsm¢ M'amommovf advarlising Thar it if wles are xero fw any fvm in the Mrg rrm, advmuing xill a/so h zero. Tha wgg<sls tnn m MeraM lemrs sM1ovld bc prescns in any nsimatmg epvationv None tntlm, sins wc maY on1Y bc a[MOximating an undcrlY'rng nonAinnr ~tr apn el 6650 6561:c
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d Fn M1 ttt ' 'M' h d--g De d d' . ~dy A I' I M1 , f d' 1 mDl ed M1 ye . p ~ I r f n Do . m<hM in Blanks N9631 malyas of iM sane da/a for nrlm ywrs. Wr fM aavcniang lagging salax bm wim anon kgv w. ao ~wl rnd rM xmc Mtrem ofedjua~ment sDeeds ameng media v BI+MmroueeR Ihovgn Mrhaps IM diRnenre in lime Derioas arcoonts f« tnix Two ~mqha ons of ovr findings sland oel. TM1r firsl e IMr advnlu. in8 wn~wi h a'll-Mwerrvl if it wnnd inBVenw IM decision b seve In rM ~'a fiM IMl nalienal advenisin6 doa nW inlludue tM daision lo MrcAax commoadin wnich arc nalienany advcrtittd fcansum« goodsG vnsus lowtty .dvanimd eemmoditin (xrvittsF TM ePCCts af onal advMisin spending by IM varrous mnsumn goods iMunrin wrn emn om in tM sgraBna. wpu. xcuw a.a n rnetn6 mal of anerr bur signlr ~ising csprndilurc equalioa nv im m for dnnaMnm„~ advn ~ i si ng on u ror Mniwmisr fvms « iimumia .a'.<.ksing respwim very wqdly lo changn in xles u will M very dilncvls b mrasurc IM imMq or advarlisin6 uDOn demand. If f311 dwcriba a M-hr fmm, for wiP M nard ro mevurc saverlis;ng s imMn uMn tna~ Brm's vh u~srnR annval dala. AM. sina (») don a hir pb af darribing IM aggrcple Mhavi« or nabonal aavcrtixrs. snne ir a stmng Dre- umqion Inal Ih Droblem will arix qvile oflm in de- nudiw. APPFNDIX In shu apsendia w< reMl;onaDrnent att tM mclf 'em nllmatn far tne 8g con- en a aixna,aa in ~on a.z .wr<. m.aml;oa Zuh'bit rM absokk value of dx assalerc re n Mrmtnan bekv uA ntimvM <oNf l Also sAOwn c tM sum or aquard raMVals ISSg) for each cqMlion. Tabin JA.f -).q.< q¢cnt tM nri- tw or models C.I. C.th C.116 aM C.1116 witn lonl consumDlion fCain tM nolation of salion 3 2) n sM deMmkm nriabk. In rabks lA5 - JAA, we nhibB tM ntimarn using mnsumm apcndin8 on durank rcJ d hk p ml. I( - 'wl f. ta a W " IeFqs I- I nke rc M ggW lepmdcnt i bk Drada mrd h'k . n h'. M1 do- g<nov Thad .' 8va' bl sNarca toll . «e1Mmullm ~sassxeon)2. emreuonarmnrr Aa«r~ .m anmr No 3 A(-11, ewled as qednermmed l A. IrwtN as pedetermined 4 A+IA IrwIN ss Dred<InminW 5 A(-tAtrcaleaascndogenous 6 A.ICaxdasmdogeno AI+• I I. vwied ar endegenovs 8 None 9 A/-IAlres~.Avrndogenous IIl A, } wrce as nMOgnwus 1 ( IL tralcd ss eMegenous /,p90 35655
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51954 0 'A/ 1961 W 9L Wv 16>61 u! 10l lanb3 qul aw!1=y al4euv. ayl a>nPOVW aw'[I!IW!ssoJ sryl ve8!ISVU! ol Pue ,a.o y.ole anane4a:, WL. au![!u>..v. w,el wl l.y+w c.w n Wa,l xEwrt v p mylp rs>y aVl, npn,,n mw w.vl upww>,y lenba rw!suaD 8uryswDe wl u! wsrvey>w 8v1 Wy:qulqp e N s!s>ywJt4 wl Jo.p oa tVea uul suuv n wus 9w,v,uvpe P>88e1 I~wVIV. alauun 8W WoJSV.o> wl ol ue41 ryn, YSC) ba w woy J -uadv atuwvl. vow vtluwa>M Pawafv s! s+oua a41 w uwlelauo> Ivuu ou p un41oJL4 ws +anway.x saspnsl Wv swua WvDUeu wlmslPV w, yuo ualv ax •nwwa yys lu m+ wl Moy8eoryl une+ q.c-euml.v.p.+~+n ay/ nxe wa!w+ws [avq aaqwoa.ou a. pue YfY) W 8unv,w v.a.a+ey. vnlJn w qwvlv ol <e. lev,8o1 v suuas uv y>n5'tllwlsuuute 4u. w Wsv q4s xnea qnw Ie4~ n>uanlry! rww+en q uW svs uVl P vys ayl le Pu!uro,J aM ~uelsuu> . lmsryas-8uu~ya.PevB,elw11W[pawnaSavy>r.,qog alepuw le!ns ws a.uwa. w lanba uon)vp eum lu.pv mo 8 W Iwoqqap s[ae ;stt ol m p®1 saW a"wv flw,pu9 >41 <Ilwsvwvs.k ve4>4 s.4+ W9eusn w apeven os Wlyuw seV uolenW a411eys w»w ylqaumun v wl 1v41 s!aywJ(4 wl l^ uw,wfv lew+oJ'vay wa+WGe q wou Pue •D'm+:.pe,q uo uon.ryw> Iwx,ol uosm, uow e PooSawo[ s>Nn 'lie le uo!IeuelJra w tllea+ s~ vo.,a ayl lo uoNryauw lews wg s~ alqn+ee Iwpu>Jap p>88e1 . ws lo ~: yaoa ayl W.ym YS'C) w, av wo,J ww !p 61wn1!u8u u 0 aw!s'pum>s wI W+u"el u! ua,leuelJea Ivl wl lo uwlaafv ,q sllo anayv pvuvvJ awaPw alJwes wL :i vy>4u+J tq I!enp awoc W pxsau!D u»y e.y uuryo+ uypw% s:YL w e1+Ww~ +!>41 mw=tlw.ua>¢o aw a,ayl'wwvu>we[~ +.,aJOev !ue4aaw Wo91e4+t1yWD+u:layl uaym+e41 nel w~ sl>.>I/a. p>sewun +u ayl lo Wau~Lw o> leux ayt wym JvP wl Wt9a,+^> tlleux,ive uwsenba uowaap 8u,rcyu.Pv. .a ayt luyl wq nlos W vBUeV> q tpte:paww+sPUUJn.Bwsw>nP:: ley~ s! z:mytMFy puuax ay~ wnuey>aw eq palny~aup e:~. v~te. u:, narc.w¢ a.pe~ey„ twswJ-. naux ~wlay ery Hu:a anpo u :e~la w'ylul¢i~'l~rll M su a 4aauu..~a:nrye..>u+iBU:F,~a~aM-alJwnu.wry:»JL'a.a4l.aa >mw!rw pm 9e'[ n. mwn P:aeq n~~l ru+ ~ n,~ .a Wt..im IS'C) u!>,IS!tms-1 pvsn(pe>y144m aw. symv aa4i'Ploo4s layl ue4+ uayn vow sma41oJt4 imusw~ wfv ol alnl asall 1 tauapu>I wuoaww-aoqe wl u,!s~ azl''>W%5>411epulnq•IValY.01w11euopvoWwlwliw J!u8n prynquluoa apw.e. Iwpuadap %Hasl wl le4t palexPW slnl 4109 'LMrvenE s!411o sua:.IM> wl lo wunPUa!s wl +ol tt>s uylwe uuoyoJ ol yucopwa aq nw+p~wa sml venns-!y> pue j ayJ. vpal,e. wapuaJ>pP-elwllao41m/50 WIew.ISavaM A>a4>eseqns,a4ro no DaLWJw ,JJe ,(lyo s! ampaawJ s,.aJOOJ vwg : yaui paleu.!In+w~ n.ys ullews tnyBNS yuo s! y sv YW4,np!p w wt sl apw . s:upuadaP D~el wl p,a n p,epu.rs Dxw. wl sunpenW 41oq W YSC) u! 8uunvo osle uo:umouwJ e},o,u ws Ju wapJywa uollqvro> le m w+ N uo ue+lnw!s wt P mYn a e uwm'unxu ~ey~ sN ~.sa4~ w Jop d.4s wl AY'C)'b> k P>s~u wm~ puo>x e wwJUO> mou unw aM 'la.al YS wl le 0. o mvlwJ[4 Ilnu wl P uqn>fv leu&s 4w8 'pp'L a woDw>l lo aveap wu 9ym a!~q~ws venOS-~ya wl Wa'01"[ n wop>a:J W mflap CP Wv I 4Pm a!wuels.j a41'uoueiv+owme ou Jo ~VloJtyllnuwsw uuamy..u wnay.un w .WV,o,[yw+.w, ~mwammw~y+asnwarc•w~n 9 Z ue4s ea,8 vae apsnelsq 4w4'waw+sn[pe vola8'nusuels-i W e vou> p,eWqs w+P'n(Pe ol pa(%JUU u>w se4 unp>w,J s,aaJOOJ'v^Jw sV It'OL ® 33s Z6a'I=MQ as6'= ,a sorl Lelz /2LOC/ 19C291 p9CI =VN /SCI II-IVNIDOC'r.jl +aWo ayl 4ua a' lo ~woLw> uot~¢Iwoa i.!+as palewossa u ~nl4u N.) Pux (IJ e>elJV ;)-) 4 m Ip(1 8uu Saa:+)Z6ti. >^'J>waebti ~4;Lp ua,all~pea41 Y >.pe teu ~ 4:. x N~el a Fpwl>>>+~ n 7J ~x4~ . n, Wo~iaa wl
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, ofhon.inF ¢rv,ca r:rnM,My a. iaiN t),hcr .:ncF"rv.w roLa.,M1.m~xcM1o,6undi,n~wiwrioncvicuconx P . 16Z'tt rg for /lr, hnlJ 09emrM1 gy egorY ofu PoaN of rM1 mihlia kla NYgaz and olha aryxe .aMraePM1orrqandeomea a.Thelal xnn,rm ea e.daaNCOn Ihe gro,rnaa ma) raMr aos rel'rcam uks. Elemric gaa ana x.nnarr ur"iyeax urm srKm onry .la/ of ralavon fdvenising in 1965, end ar:e migM weli douM IMI macn wnal advenis;n6'a TI'is Inrm rGePhane ttrvicex. Ia IalePM1Orre LN% of vta on adve rsin&" Mach nr m nirry bm IM w ar na qaa ma/lardan selwid OPCra nv Serv a IekPnan maac uP IonIY abour 10% or Ilrixrcarcgorygin 1961fi2 Ir rhua tely 1 al adverrsing o ao-cocielN ailh Hau M1oW OPenn TM rworcmmningamgorissorxrvia3wnaumPrionareTranaPOna. andOrhee.TMlmr PnrNOrlMPolbwing sallsh ckavlr:g nnd rcPair, /il cka ng dYCing Presxing allmcoq sloragc and r<Pairof qarmcmx iMUding furr,arM IauMering, maublianmmrz (3/ barbrrshoPZ M1eaolY Parlon arb MIM1s, 1</ mNical care xcrrim, /sl servias hr i:M1ed w, m by financial inrvmNlares ttM in amNnim d 16/ admi o xprcirrN xPrc reAlmo seNin arkelsraM <m I51 d«s nm even rePr<arnl nusr nre,¢ aaks m ourlocalmm good ca 1 droPP'ng Tnv ron Snvias aiw. In 1961b1 only t6% M e.Pendirurm ror Tmnsponalbn Servlm was JrvwN to Pvr<haud Inrer~iry Tnnqwnativn The rcmaining 97,4% «cn,N Dun.,rpP1iN Tranxronatwn arM Pmchazd Iml Trer.~- pvrmrinn neilher of which grnemlM rutionN adrenisng. rt rnux Ich wirM1 INE CD aM CN m pkasbk variabtm in aa e9ua eaPlain nlal v nnal aa.c iurrg. Sampla inkmr oa/AkaduswdroplNEaairsestimarr.NeoAfram aasalmaslalwals nagalirc and ncrtt signirrcanllY Waitivc. On IN o1M1Cr MM, ae hare n wnkn iI,:J dm PiunnM advans;ng miax ./ xla,ly. L.wM 'ignif9<9ncan,ly ,,;gM1h n.r m ,n Im Jmanlrs.nm ni rM1Cm wxx m xignincrm JiRercme I.crwttn con..umer nnJ PrMncm nahks.0f cemxe rhiz mmiusion wax MuJ m, xurvcy avnirna (rnm 911YZ sing J rmN in mPle. exiJn n by Stigkr 1195P/ arrd Millv'11969A ns m dalm, rvundomrucM1 hravirr adverlixing or mnsumcr gaods Ihan prrMacar goods." TM1ere is IMS govd oulxke cvideme lo xrrPPOn onr condn:iorrrrwnlncaamnlwaowcarormvcsmrnlinnroauarxemabk m rrom mnncr gon:;aarario:,. rloned above, we arc nor vYing ro imPly Ihal rw nalional admli.n~ng s aa.wvrW witM1 IN <aKgoria ofGNP IMI wc harc dis- rardeJ We a iii mP1Y ar g Ihal lhere u E o«a vm riv~ wnh IN a ala or m mtt durabl anJ rondvraEk zkz xaocislN on1YIM laum Iwo wmgoda art rradN m eaPlain n in IMaI aslronal ad.cr~ almo all r:f IN qw - ua tt :rrralw aalameim o~ma. cwuNttneyvafivna emPloying IN variabin CD aM CN. TMOrdi~rylwrzqaareeenimaleorlJ2/involringfnaulwoquaatitia h IN rdiowing anarc IN amralmn M1a<batt, rc<arimalN wlhom IM nr:gvifwm rnmum tttm: NA= 1J65CD+LOBCCN+.5g35NA/-1) (lJ/ PSlel 1220H 6logtl 1.5N IIIR 5.415 Rr = W35 DW=LNt SEE m l<01 EarlmalN nandard mrors arc ahawv in Parcmhna d'narly brncatM1 11s aM IN ass«ia1M rnlalistics mc Mbw IN umMaN crmrz TM nalisric SEE e IN slendard mror or IN ry:mlioa. :w g~piNa olapnW.MAM/1%91fevM.lom,l,smm~~nvrmaraaeven:ringMnirolr.kr ::QamJrh:u .vsrra.rab 9650 656T5
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w plsswn.a.wCxpvuu>a 40eoWEe s~yl)u>lue!,vA Ypooa qunsuoa p oln>yi w, s>avay> w w>uasn(W IenP»?IeInISOA y+!4. IPpow •/q Wunlan IN+>q ue> eusnuye Pun rv Rlo/ m, cau>y> leys W J>m '>WOa wJ awpwds uumwo> >o'8u!pmJS nwusuoa IeNe paye pu mp 8muva.pe leuo!leu Rln/ Iryt »Mry0 qql q pwJ >m oesnWiu,JFunl.wurunS S'C s!p>w lenqs!pu! u! eu!sy,>.pu ml Wuuup>4t w aaory> 1>,niavssp aw>pu >wos s! >nyl, s(q~no awyt u! s>8un4a oi Slp!Ew spuoYSv ems!y>.p> pue tpooa uwnsuwlo cles>yl iq paueepx»q ue> n,paw len%ypa, u! 9w,pu>ES amvwepe laua,iury prvw,/uar S!lo!>W ve IL [I'~>psuw,lea!Idw!>yl ee41 q uo!lava,41 m uwsnl>u~ u!ew,n0 9uml,v W»•>aute pv sseapeo.iq a.oryw.q eu!pwns ueys o»es w, oeurya q ws ~uoAC~awwse.amiseapvo,qeoGSUOau!qoJSleylpqaqeauo!wNU Jo L- w>I! <ryn Nyl, o!pu yo.W pue ou¢eewu SuE.LSroau '»opino La,>wpl ~!,u+pu YaCUd muunq'a,pe, ~AS1u!s!al>I pE. >'>oIIM u.e. ausuoGV,lseal ol w!sv~eu 6ow uw,l wWw rye Jo uu>p,omO~ICws,nou!uo!snpuo+v41 J~mEOwauWnol>suy a(~ e~p:u ag.ayw >ye uryi Ju>wuou.ua mup,p>y/ ue caunp. u~ xip!dw vwu Wiaev np>w WuA>4e ~e4e WnoJ (9i'4 Tp611 Yuola '~usqo ueJ w>.ry vaulu N s!41 pue ~enE> >~>8>6a. >ye m ~ . y>m 8mpuoE>v,o> >41 ury~ ua,q u41 uo9enp> ntledsx>u aye m('J.~d ~) no : L>oa wusoa > ayGw! ppow uyl p>mnle s! np>w Jo uw pc.mp ay~ eey~ m Eo,p . nu a~~1~~ ~p:~n ~y41 ~~ W Ww ~~e e, ae1~5 uwm'>Wnal> D4plau wJ hew>Cwoa oi cam wu.auq rye a.oqe au.,n!.mw.Ww:!41jo~~ ~~p~~slpaW W Wee>uwaq ea 8uuaunpv WeJSnau .(luo Inq t!paw pv m au!u~n.pe aara.>u! q a.!rp yw suw,j vivs u! ae>nn! Wl~e>un u>ppn> e npisuoJ m spooa pays!uJ>a!i'+~ll^V e se uunJ ~ya~w eu!siyanpv .aJ ,e4i sisaaanu v4L xpou ~,uys ti>w>nn uo Wnowu m Wu>+vui >4 u ya.pu 1e41 a wl w~!ww we w>ia~.oa ~w >y~ >,. vmw!..~n inve meo ae n> nP>m,or>w>yi u ia >.~ ,oJ sl waa. . en m jo uo sz +wl¢ssn.. x 4Ww .+eu!pugx>y~lo ~Vu> J ou ~ y .P nyso ayi lo ~e.a.. ,nJ /'.~'JJdI •olun v>yz 51954 0'006 P>4c9>u puJ op am 1L'Cl'~> xQ au,m,l».spn /euo!leu lerol +M Wlew ~ qn sqs wyl.SSq y>nw v xl!P.qe!nr. p>IO!qu>yJ. 'J~ m>aury> ~e!ewuE als 4w auu pye asu, />a,q e soys svaAvCUau (pro 'npau M^P!e!pu! >ye avomy sa,lu n!ae-8uwlu.pe v&ee a4s Jo ~9.u.. ivWw . w.uwuP. ry~ suuu v. ww.,v,e w.a.e P.44Wu~ma.v unw . w>aqay •~•w~.wwaaiw~uawr.olowsPmYavmamJOyw n oJ P nu=un sawo.wi y x...,.~ aoLl Ia..'~a ayy'>Hnuvuu Prv~>lt'~e,+ux+un.W 1..>V•lo+Xr.».*LU9wuJUeeP~uuxp!Iwo3.. p npuwf. J>u.,.P 9pVm N uw4.w'W!~+0>pwe.+4~aoa>e v. ........... ..... .....^ t.,-6,~
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N.in aa.nnw w m,~nr:r. f.mrt,~a I,r.v ncre ch e.cmN a'signifcaen R mem orcr m,v1e/AlViiil The lnl/owing mNia, whicM1 iogernm mml:ose NA, are cansiJercd: ()u:JovrMCJiv SR = Sry,t R:Wm work Tclcvision ST ~ Slwl Tdension NP = Newshapcrs MA = Gcnval and Farm Magazim.z RP = Rosinen FaRen N0. < Nerwork Radio Equa:iom lar :M1e finl rovr arc dtimasM w'nh dara from 19566) rs ashe porsibili~Y ol aulacorrelnlion of the dinorbana leme mmr lasl 8a wmNCrM, we vu Ine periad 19561f1- 1- IV, jml ac in 1. Figum on sM lasl f r med'a aa awilabk from 19d9 rMaugh 196I. We Rrn slimak ryusliona fm tMe medu var 1. pamd 19C9 m- I96J rv. Tnrn. rm wrroarn or mmRarison wirn nm m~rr mrei>. ' a~hcr956f11-196rIV/eriod.Thisax~ioncwMvda : m a a~sroaaion ormia arioa. D<nnaa<omgar:aonanrrnmnranranim.rowo„wmamc-wnanm- ir:g,na grnr.r.nr Ibinnrna. wa indian nca om nnn nmmnarc.nd n tM paxmation of tne prckrred aqualiorqs/ ~ r ueM1 mWivm il snovld Er undenlood In,l all navc baw reted usiog rne 5% gvd M xi8nifmn<c. TM1Cfir9 ewonull hylmrhmaalMr Je largd aarcrtising- vks ralio hss w rrmd arb rw cyzliul mmqmem. This is ratzd bY mmpanng modd A.1 to Inc anera we alxocaamia modds A,II. A.III and A.IV lo ue wM1erhtt 6otM1 inRUmas arc parm. Anorher noll hrwrnaria lnal.,a wa mmliona4 ia neaer rejaha. ianar irbom r«a, aa pmml moad A.IV if an adcqoak appmsimelion erfhcir innurna. Thisisknedbyeamparin8modelsA.IVandA.V Finally,weesamine tbe noll M1YPOlnesis of rro sutommlalion M tM1C eero~x using IM1C pns dexa+ibN in IM1e Wss seclion WArnever tMa hYCOlhzais n rcjxe4 il is ro be undemavd IM1aI Coopefs approaimale praadurc has heen uad npemnwer.en a.ukde r« ra5s, ea n.. aeswea :e oro Iw.Rr Mo r:iwe:ne.eMV.nbmmlwxwWw. +oaeae:r.IM1tiea ~wnh.eR. nf 11 ~~M1r « in/ s: f ihe fin: n~ke: rwR~c vl slvxv fo n , I:ovx um eaamv:n/ f oriM ycM'il vrRci. rc:TM1C r n JiR u ak8nr s~lain mJm, adre g. The M1es: ryua ccfollow & wi1M1 an <somelW amrvorrt/at:nn mcR'xicni1M i551h OD =.alffl CG -.OOlM51TCGI a .586901N- I/ /l9) LMgq (WI1g6/ (.IJ51/ 2962 -3.850 a.Jal R' = AI•A UW s 3 CI5 SEE + e.5a5 AI IM1c poim of snmde mana ~M lar8n fcquilibriuml aMnding on ouldoor adverlising Is U589% e( she snlm or somuma goods. Them is :ro crNi®/ rariadlilY or IM lergel rn~io, bur R is lallin8 al a nle of .OOl5a9%per ynr. The lags m tnk equmion na quik slwrt The mean hg's iligM1dy oru one quener, wirh <rJr% of she adjosrmrns to e nraimd inaeaa in CG t,king Claa in sM1e Gm 9oatta. Ry IM1e end oraom r®r.8g./l%orshc adivslmcnl has bacn aaomnRrM1M. The rmuns ra sROI redio ,a a bir moa xariarrmg Again rne nuR nr0ornr.ds or ro qNiral .,riabirrr in rM1e nrgel adacnismg-a.ks nol br rqaizd. No sgmfvnl aalomnHafion n prescnt. and u'r /ecfcrrzd zqualion n SR =.89]1CG a .ppI00I1TCG/ ~.3dJ<SRI-11 ().101 (.IJg51 (.~) 1.119]I 6.ddJ -3<XI IOJd .96aU DW ® 201V SEE = 1.661 At tM1C umpk midrwinl. tyuJlibrium sRCMing on clwl ndia ads a N IY. orrM1Caakr efwnsume. goods. Thz ou ofrhis medinm e falling; IM1C nrgrs nlb drops .OWST/, lar ynr. The leg in rhis eqvzlion arc qni~c ahert Thc man l,g is Im rhan onc qvantt, wi1M1 >565% nf nc~ adNSrnrcnr lo e mainuined incrma in CG Inking plsa in shz fim qvarrec By Ihe aM of oa ynr. 99.65% of IM1e adjnarmml hss ban eaanipRshzd. . .... Z090 6Sfit<
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nsnip F m discussN in 1M1;. wilM1lsml w s Cln <rneW a ^mPnne< GNI•.Go opms. or<mrno n's,<,nn~rama.<mnF,,an< sn. cn:~ . alm uW mn hc Ir I<d so adve g In.nlx IncY r^ ~f rM1anga and goods in'rro¢xc cFan ol fnalasa d1of'Ihc in orY-noldin8 frm. Tnry do'rerrcxoi fmal sala or r:mn sunMrins raw mal<rials, bu~ m<axo- aasnf.av<nisingqn b«vpettN ro b<minim,l. Clwngc In invamodn of finished goo& as IFe wMksak aM Md I<rch :fo rerresml f 1 sata u fx u Ih< rralum s mwcmc4 bul w< gmerally eapec+ Ihe pmdum to bok bcyona he disnibulon fo ssks to mnsum<n Fm m<tt r<asona. w<eroprre gorarnmmf mmrmaalion dcmMoy«+ar;e mularion from funhcr considnalbn. dsu ms 'nLn Abena aladv< singinmajormedia m :n smhare cslimand fo dotlsrs A m:mbnnd eqvalions d fFe folbwing or<r m<r<rioa 19w tu .196nv: NA=a+rNA1-/)+B~Y~+...+b,Y,. (1E/ wFtte ~be y's art a subxl uf sM fdlowing xs dGNP wmponrnts, in bi/liomdcurrzntdollars: GPO = Gar<rmmml Pur<ham osh<r Ihan Comlxnseliond INH = InvmMes~rme;n in R<sid<mial Snuclurs INP = Inveslmml in Non.RCSidrnsul Snunurr. CSHS = Consunrcr SynMing on Housing Smicn CSNO = Cunsumer Spmding on HouxhoH Orernions C50 = Cnnsonxr Spmding on olh<r Scrri¢s CSt = Comomcr SPandmg on Trmsrortation $mica CS = CSH + CSNO + C50 +CST = Taa/ Cnnsumcr SpeMinB an Snricn INE = fnr<stmcm in Crodu¢i s Durabl<Eqvipm<m CD ~ Cemumm Spmding on Durable Goads CN = Consumer SpeMing m Nm-DUrabkGoods TFe 6; exRiei<nls lhvs rcpruent adsM'sn6-sala ralios in smrhs d ptt¢nug< poims.lM largq ar epuilibrivm nlio d advcrlisin6 ro Y: n girm bY bsryl -rl variams d o.n we¢ ar tca whh aM withom Ine hn<rceM, o. b- ®xs. amomrt<lation in fna -ls «aa r_f. ane fhe umtikelihn:xl unnnin6 P.: a.xl:n<imn+JU.ed Fy IIiIJrc~h nnJ 1/9M0 waa <mMnY<d fsFmu.n m.vd< u.ing Il:is rnKMUrc will h< crrM m hcr 11iVfrc:h 1 es. Sim cfvircdmw FG:rc /nfxri nffitc.~ nn,fl~3fnr ;hc rcria/ 19?M1 111-INSI IV cnMnr<a 1. fr 1 N nF.ervainn A. 19Thc r<suhs d 16cx a n h quil simply su ari¢d. No s<nsibk munliom indudM any of Ihe GNPmmponenls es¢pCD aM CN. TM inlcruM was ncvn n<ar signirron¢. This is ~wl w saY Inal nnlY mnsw;er guuds nr< a;tmlisM All th< sampk <rid<:as ®n lell us ia lMt ~ne mosl ttnsibk aM smmsful <ymrion or Ihc lorm azl lor mrlamirg re9onal ufvnrsm8 iramde only CD end CN. Thcrc art Iww<v<r, Bood ra <apca tb6 n fh< grouna ehal Ihe antt nlegori<s of Bnil saln arc less mi¢ly adv<nisM ~h sun;tt goods. Wc :row mm ta an ron d mma afsvmm~s.~ h mma dmr Insl gov<mnwns pnrchm mua ne ernrld from fh< modd. h is h.M lo sas bow rrms ¢n rm shas edrausine ln rnc mMia wuW grcatly aR Ih<ir sals la govcmmmsc Thne art murh nelta marMing s<ebnp¢s kr Ihox cuslomqa amdingtorlelnxmalRCVnrucScrric4adrenrsi~gwasonlyYl a oflhcmladpmninCOnln¢Corenariionin 1965.'altsamaudikdy Ihal marA d rh6 Wu nasional ad.erli.wng or rhat murh advcnuiq d ssoc'wfnd insmseaiase praduqs's nndenakm aM touM in way imo nal adsmving figurn W n mus slan wim mmc wnGam¢ IMS lillk nasioml adr<niYng was assorialM wnn nn. consnrslion, aM we &el ak m arorFing mr<s mem in r<sidmsa aM :wmreaiemria st H ard INP, frum Ihc epuarion. Simi/ar nrts. INHmnsNcrations apply so mnsumpsion d M1ousing aervim. In 1961L266.Sy dlhal <alegory wu impulW rml on ownr.r-dxvpied rmm-hrm drMlings Tbnc figur> ao nol mrcnro:d ro nusir~ ahz mlt d9 fne mni¢ ror rmsal relus dfarm howec Th'n Wra Inespe¢ rml ryid for smanruavry<d non-lerm dwnllmgu rn<myor ol<8ory d housine serri¢s which rtpmrmn busin<n nlm Bul nwN aa,<nnins br rmul nnin is ao¢ loranr: ir is nara w tmnk or aay 5650 6S6ZS
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a I, wnn ~dy n~.-.~I<nm inuaauzl mMi. nann . m< only nv< srmr arga r rrd;<:nya.ir,na . m~ smwm n n or cc r~.n Fy ~ nrgm n bY Wso%. AlMnew cq. (J.IJI sM1o. cargn r o d n nel adr< MKrs salc of in evnds M~38)% Thi.r ~f.II n8sal c of 0131"/, per y®r. TTe indiarM ed/us ws 3I00% oftnc r ta;n<d inc nvCG ak;rcgsptaa n Ihe qua of sneincrose. w In M.ES~ M Ih< aa}„nm<n mvla<e ann m y<ar TMnn~cq nrgexnlan r,rm nsnnw.mim<r rrelari entt of a u<nd m Ine ral~o o( sMvdine lo a+nsumer gnoJ salea ~r MA=IW3CG+ ~6)9MAI-11 13.15) /~33111 (.0]]JS) 3.359 1061 gs = 9g81 DW = 1.812 SEE = 36.12 TM1C M1ypmM1CS's IM1ar Ine cveRrci<ms M tnis rthtion ert tM1C sam<in she soni+niods can:ml bc rcjccl<a. simv nc~ F-au0rtic wiln 2 a~M )0 d<grn< of rreNom s only /.15. An <qwtinn of rL< foem of (J.IS) is tn<pmf<n<d Mimal<d ror th<lafn subpuiod <saminel scperatdy. Eo 13.151 iMialn ~h< Iurgtt nrio u A)1 % ov<r tFe <mi~< pnird Thc cst ima ~cd m<en lag is J SIg quartns Only 2J 21 y, of any aJjuslnmt mmpined af/<r on< quartc. arM only 652i e is a¢ompliahed Uy ~Irt <M M orc y<ar. ifi< catlm,l< br 1956 18 - 196) IV sbows only sfigMly shorltt lags; lhc cod(rcimt d Ihe hgg<d d<p<ndmi s'aziabk e 6965. ComparM b tM1e mcdia we M1ere naminal so (ar. Ibis is very sbw adlunmrnl. For th< <nUre period. IM1e Ent e9velion fo. businns puNbliom n r f r a .m..~,I ~M1<nyh.- '~ I ~nnra~~,.~/2cax<~rei M. he lags are 4~~se Io~g . nnfyf316/ of udfns mcm g p hw n~iM~Arpolhn~ r<lal (FC sa pcriMr m b< rcjened'al <r<nsnc~ 10% 1<vel; tne Felal s's winM1 3 and )Ond<grcn of frWOm u only 88. BW whm rM1e Iwo wbpenads a.e miaW ml+,ret<IY~ IMrc k tle,r evidma M atsunvral cM1ang<. TLe nen equalian for 1956 111- 196t IV "v IM1C followin& whicM1 shows no ug rn ttrial mr~el,uon. p BP r L006 CG -.0096o51T CG) + i)8g BPI-11 4J I)) U000) /003031/ 1~1051) sOfS -A.Sf) a50) R' 9l)0 DW s 16W SEE = 1465 Whrn an <qvallon or Ilrc brm of (3,li) is stimatW f0r IM1«arli<r sulr period tne eo<IFiam or (T CGI h posilix wilh a e-sla(istic of 3.3)4. T!s poi~xs b a ris ®,a d+<:, a raB n 0,<usag<ormsom p,m~nl;nu, E4/3.IY1 e thm oru przfnrmd <stimas<fn th 1956111. 196) IV sub peried At Ihe mkpoid d tne inlerval tk ter8n rel'v dad.<na~g n busiza Iwpcrs ro salm drnnsumm goads's.E86% aM n's faNing al ak d.OMC/ pc ywc Thc lags am agah~ slwrt wi~n ~Si.l2% of ed'rynmeM ta4i~g plaa w ahe firs 9vana aM 94)C/. w thc BrA yeer. The final mMium, nnwork radio, yiddN inlrnssing rnolla No satManory <qution wuld bc ronM ror thn whok t9e91B - 1%) IV p<doa m an ,nm„pa m< Vgg<a a<penant ..ri.a< haa rh< ony signifmm ca<Rwent (n'aas ow pr<.ious tt Ien<e, howertr, w< suspened Inet zrunvral <lunge had lakrn place. Th<following equs- ritM1 rq siq~ifinnl Brst ordn snul corrclation, wsx our bess nhmalelor Oie 1919 111- 1956 11 pviod: slmilarluD~15/~ BP =.1883 CG +.9CU9 BPI-II 13.16) NR = Llgl l CG _ p<g</ (TCG/ I(13<02) (0o121J 1~ 19) LOB6i)) ~ 2.181 60J195) 29.10 s .98)5 . )5J9 / -39 S) s = 9))I DW p 1.5g3 DW = 1.86) SEE.IS.10 . SEE _ ).699 6090 Y56.5
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<aad<a sM r,riablmr Cq m ca Usl. wan nr walmm an im«an,, me sumara <r.« or mrmm<ro¢. w .inN P m M ttm sb euima,d 135/ b' kxn sqwr<x,M codri<imn dITCGI wns larga andard rrr r. bm gnif , sne IOj; lerd.llrc on d rmvlts abmined wM1m IT CDI aM IT CN/ w<rc addW. r sog<Ib<r, /o /l.]/ and IJ d} T ancs Insvls uy nolM1ing ,bom advmisinga pla« in ,Irc emwmy. TMy m«<ly ne,<,ha, IMrt's ,w ,rndmcy fm ,nc ratio or nabonal sdvvliting in majoc media,o Jsc ssla orwnsumcr dumbks aM non- dumbin ,n rix or kll If, indecd om «onomy is Mcoming mor< cmc4 wc wova npx ,M k M naronel aamising o GNP no fall whik lo<a1 ad.«sisim wo'uN M e.p<ned lo baome n,. WnM1«n informatien on kcal adssnising ro bmad ~ hw, o-<~wr in ,M amnnm d,arcrm ns m m< aoonomr , is om« kcmn d im<res, >r<mw pmdv«s.M IM podud rro-cyck mgen«aLThe<lastiri,«ofulvwi,M1mpectloWvertisingwillgm«ally be tlirt<rem for pmdoas in dirtercn, stag<s d IM lik-eyek. Casm qum,lrfrom (3.1} IM1C oqimil edvcnuing-sslc ra will d'AW. ~ airanhaM<r.<,Mmm~ber«impon,nwnro<w.wawixMa aM e«Immg p.oawva in sM «vnumr. howcvrr: IFCrc's ,w w.r lo ure Shumpex<rian wavm nf imrovalion. We am rarcM m assum< nercs~Ml, on a.<ngc tM diznibmion d qoductx oaa Ine phsm d Inc lir<-<yde is subk. We on allow r« ryclinl dirtvexex in IM1n dnVibinioq M1owever, Ox mi8n1 espc« mom ncw prodvas to b<intraduad in bnoma than na 11's also «asonsbk so avppose tnas whcn mmvmpian ncapaMr4 advcnisin8 is mnrc <I[~tirc in id4mang hnw Ihe aEd. onal ddlars arczpem IM1an it is in alfing Ihe dislribution orpmw;ovs spcnding orcr wmmodili« aM bnrMs w<dcfine PCG = IW IICG-CG(-IIUCG(-1/7. Tn<rariabk PCG's,bm tMp<r«nycdungcin CG Irom 1hcprtriom qvarln. In IM1C nmpk period, sh& qvadih lux a mun of 133. AI nval atry IM1e is a nh d gruwth d[.93% anV4ng IM m«had d NIWr«h ,M Lq we alimeled (I5) wilh IM addir dlhcvariabk/CGPCG), 'Driaalloa<dlMSargqaemsising- ab mlo lo aary alh PCG. Th<alimalW avlewsstlatiun wclfnimt nnu n n,n<r w<« a. udlnws. wh«< ,M ~un,rcm. „«mwa.drz~rycJis, NA = Ll.b CC a.qp31) ICC ICGI ~-!x15 NAI-11 136' /19,9V/ ll*1633) 1.5)Cal fibls 1121 l .1457 Rr =.9930 DW = 1.918 SEE =1LW Ad/es,m<m 11. suMaN erron lorcred IM r- ,tcd wi,M1 ICG PCG/ from .3fR<. Thns ty. (l6) does mt1dndicatc ui tMt tirt urgel adrer64nmg-xaks ralio.aries rydimlh. n ol(16) wi,h IM ordlnary kaal sqsmm at)mel< nr IM samc <qaalion is, howe.cr, qvil< inmruting Tbe <M1i-aqv.rr ' wiln one e<gra d fr«aom <on<apoming w sM nypdhcix dan'os<ri,l wrrci,r it 191 This is rsh1/y largm Ihan IM valv< whicM1 xignals sipMwn« m Ih< Ikwl: 2'/l. TM Fela,islk wilM1 I aM at degrm d fr«dom, vhien ax we,role abo.e proba6h prorid« tM svperior tml f« tnu hypvtM1«n, dom nm dgnd r<j<«im N k is'ryss snghlh cmalln Imn sM <n,iW .aln<: zgzv<mus 3.8C. Smcw< <,xih «7«a m<hrpwnma mal m<«.om.m nm,<riany wrr> Im<41M ardinarr knn aqvart> atima,e h d Imersl. This mfmuk is tM fdlowin4 reWimakd wi,hom tM imip,if m im«apl: NA=QIO1CG409D66(CGPCG)+.IUSINA(-I) (1.1) 2)m) b("p) 1.113n) 2.631 1996 6,243 Ns = 9936 DW SEE a 13.1d TM co<1fw'cnl of (CG PCG) it n« f«malh sigvfinl n11M1C.5 : k.<I, hvl Ihc tasssksk is qui/<<k.e so ,M «ilirst .alo<d 202 Comparing Il fA (1.6) aM (LlA Ihc <hdv bcfor< ® 6<kar. Wc an aaept Ihc hyp«hcs/i oRCr<d h(}5)„M (}6A Iha, she<is nvlatvndasion in Ih< rs aM m<nliml •arfa,inn in IM largn mr Or. we m ahoos< Ihc csplana wn nikrcd br 13.>) Ina/,Mrc'n,w wt«'«rcLlion and /le urgtt ra .riN tne <yck. Fornxlly, Ihc ksd d s~ x< a<bimd Ay (CG PCG) on Ibc auvmpion of su s«ial cma4sion is gr<m« Ihas Ihal allalr,cd by 0 whm sMs mumpioo it nbacA. W< 1610 656i5
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cRrch;posM1C: - ~~MSi, Alw M1r some nlvr< uspcn < argn<ra o.bul rial <o c obviwvv. ('on mRY, I~>/willrc asl!e5/esov Me(<ncd<anme~<of~Mnm:onnlnJvcnsing demioneqvlalion. Pelort wz e.amine a Ilind possible ouse for changa ;n IM largcl advcrtising-salo ralio, som<otsnvalions are in order.5impk.vrrela- nslysis wuuld n<ver I<ad us lo zusp<d thn (CG PCGI woulo Mv< a.n'gnif«m roeRxi<ns in IJ.11 TM <orr<lal;m Mlw<m PCG aM thc adv<nising-sal<s rn;o. MA/CGA u rrzgalivc <M tinY in thc sampk: ' uel lo -Olal. Them tiatly no sydinl vanatwn m tM obs<rved adv< sing-sals In xclion 25, w< discvsud rh< Nedove-Arrow 11962/ model af I advttliung sMnarng and wmrulM h w;sh IM1< modd Ihn ondcrlia ovr invc9igation Fmu W< ~rotM thsl under IM Hcrlovo- Arro umptians, IM1e mm vmf Iarg<s ra r.ks-aav<niung mno. bvt r.rMr rM rafio d w:a_iu/mt mti good-wiil slock. Aamtsing sprnaing is vi<wW in IM NMOro- Arrowmodelasgressinv<slmentinlhisdePraielin&demaMdetmnin- ock. Tfic analogy wirh in n dant arM alviPmcns n obvisms.aM i~ wovM kad one to su~spea IM inliue~d iM aadenlm n iM dclom;.livn d advml;vng spmdinb :n Ihn modA wooW;mplyeytlial vsriability m theobserved advtt- o, arM no such variarion'v fonM Also, wch a Ih<ory waunW rsnggm'thst (CG PCGk wM<F u do.<y <nrr<InM wim tM <hange in CG. sM1OVId M an ;mparfent nrubk in eQVations like (l.'II, whi<h ;I' nat Whik IFa< rcmarkz do rrn <wut;rme a rigmovs tal of sM1< NMove-Arrow IMOrY. ;t b<ing <xtrcmtly dilf It las pnintM 'on 26) m d<rive an euimabk <qvalion fran Ihet tFwry. the tM1<orY r«civcs na supporl lrom IM aggrcgnc dau wmirrcd Mrn F-inally, IM add;lion ef trmd terms m (3.]) did iwl imqa.e IM e.planatory pow<r of " cQUalion w< Grsl edded IT CG) vM shcn bosh li CGI arM (T PCG CG) ro (1.14 in HiWrdh-Lv nd ardfmry lon sqmm at;mar<s, wilh aM withovt int<r«Ms. IM caeR~cimu d thc addiumW variabka wmc n<va largv thaa tb<ir (adimlcd «omb 'rysIN1 staM,ra crron TM hypmhsu dra a<cuhu Is<nA'm IM urgn tio ofml;onal advenising iomajor m<dia to th<aks domumer goeds still naM; even wMn eaoum n tekm dthc <ycliul variabfhtY of lM1C urget nlia 1 adJhknal va s IM1< ra ry:lY, w< ~eN Il:m nlin I shvvidrro aRc.v~Fci ~+Jve :nRurnmMi.ingM.licy wcil a cMadve n gvhuM<r leapolY h dnr iFa~ ;ndoury Mi«nrdlMS .Aang<s ;n IM ;nuresl ra <. (1Mm smT «:Mitium, IM hiBMr ~M intnnl ral<, IM bwm will b<th«quiGbrium 11 advcnising-sals ralio. Thn shovla b< formally dcar frmn ry. (I.IM1 rn(mm m indunrY dcmaM ropvnas gmdoally to clangn;n t adwr- xnb som< o! iM Ma.la g<nkd by lodajs adverli4ng witl M r<z1isM in sM fmme. The morc M1esviFy tFnc retor~u are dicounlW, MkssM~bbki rsinb ain di/fi.vhY ~F <onsNering IM1e impxt d tM rale dinterest rs l th< <qunion for IM adv<rtsmg-sal<s ralio in a rom limarway ~hm d<PmM on IM <aact fmdional t of th<d<mand Malion. Th;s, loo. should M dnr from cy. (J.l/ W mcorpor<IC ih< I< d im<rcst imo mr essmata by aasnmin4 . vcrr rimpk dymmk aainnmrnr m«haniam. Whcrc Q• Is waamdnm rtln ana Q ia mtl me iMt for tM IYpial (rm adrys ment of Q Iv Q• sakex P a«.<.mre ~s to ~ = flQ'.Qr = xIQ' - QI. O.g) wh<rc IM pmis;:c «nnam A is aaikd IM ror« d adryslmmt In tM ;on d(l.lA tb's aasumption ykMS F, = Fr = l. Th<hnl 1<rm m IM righl d (3.I) mus hcwnrcs Mr * x1'HSis raclor, which w. nll D, shonla M wW a mmsply 1M larg<t advMising-saks mtq, a n daes l.l xvmi new ProN<ms mw .ris<. Th< r;. wFas to nc rm tM m d diuwmk Wa <mploy shc ykid on MoadYS Aaa «ryona boMs IRA vsing tMqmrt<rly av<ng< d momhly Rgma <sM<sad a lmmqn. Sma all bng~t<r re higMy <ortdat<d. shis's prahably as good s choi« u etnY. Sinsmthe s almou e riskirtc st Fow<.xr, vrc mivany <Ydiol or sxvlar changa in 1M risk pre- ms demaMei by in rs Thfs sM1OUN M a min« omiuion, antl not cbr M1ow to mmmrt ths M w'nF anY M«trio^. il To vanxlat< th< sak of im<rtn imo <mtinuom lemn, <orrnrpmM~ ing to <a. I1gA wc mason u fonowz Ld one amnn b< oz pniod. L<t r be IM qmnaly gm« dinleresl. Tc vaI« one ydr from today M wrc ddh< invnzd taday at a diarae amsml mm d ins:acn R e 0090 >56t5
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Ua und nc or4 ~< s fk<n n+/v ri vrsAn~ ry n fm wor4vklevsmn r/mw. tF:s~rvl <sbibils „o. iax++«~r,mo<+,~rdaum+. Nl' ~ LIIaC(i ~ .0160JITCGI ~.5553 NTI-11 13.I11 Lldlll Lq051a11 f.leWl 3~09 J009 J.900 R' =.9888 UW = 18)g SEE = JO.iS A1 sbe sampk midlwinl, IFe nrgn I+mttmagc'v .MB% ard il is rising by 01«%p<rrur. TheassimasN mnsLgn9igMlyabvv<o:+<qvan<r, wirM1 M.a]%of Ih<adjvum<nr to a mamniv<d ixr<aae in vta Isking pla¢ in iM1e frsl quaner ard 9049% azmmplislrcd by (Ae md or IM rsl e Wr. ovla eal+<m spending in spol rekr'sion lo adjusl morc nMdly m<M1anBaianl<s.aMlbisismdeedwbslwcfM.NwicaflA«stimalm inei<es< signir m gai<al rarialion in IM1e largd aav<nismg-nkx (ro ror Inn mWivrn The AyplAna or no treM me or rw mlo- arc nj<ncd. in tbs NibrttLLv <stimal< af moa J A.14 tM1e weRm'ml orlaggM adrenising is ovly f.56 limn iu (adjv.nei) nndard <rror. Thvs ir is +wt zigoif m n IA< 102, kr<4 sM sh< aamM< ir (eras ax mar aarvarm<m ia ee:malry mmmaamm. wim 100%of tb<respons<lo a maimai~ iv<imu iv CG Ia4ivg Maa in tA< qvan<r M IM incresse WAA zb<IeggW drprndmt reria6k prment Os< iMicmM adjus(mmts arc 68.86% ano fl+e firz( waner asM 98.JJ% er tAe Om y<er. TMdiRercm<bnwan Ihix panemaM imunnvrovx ad'mvn r. fkra w< r w model A.11 wiVwvl M1x /agged deperMCm variabl<. S<riN<orrdadon n qvin tl<arly prmml. aM IM1<arirnatW valu< of slx fmorder avtao.Mazion meR~cimt s 9o rn<om<r xmdxlia ar< aa rolmw,: ST=iJ52CG+.032n<(TCG) . p.12) 1.6162) (0091JJ) 28a3 2.d5] Rr =.99N UW = f.533 SEE = t9.68. c+mpk mial^inl. - i-al<d mrpe~ p<ramaF< is .P51%. A siinF"~ c+rfIMIF9)n' ,aklkssrhanlM.rat<sdin<rms< m.IN ror or4 relc M1<fovr+m<aia fnr wbi<A qua rcrlY 68ures vaila1+IC or<r Vs e+uve 1-96] p<nM In add'niim lo prvmling ovr les~ alimas<z wx Icn tM1< snb1Rlr or sk s1imal<a m<If '<ms, nxinp tM1< ~wo subperiods /19d9111. 11. 11) and 11956111- r96] IV4ar For sAe <nlirt 1141111 - 196] IV pviad, lAC bW equafian for n<wspapcrs iz IM1eloilowin8: NP= 9880CG-.W)N81TCG1+.]915N%-1) (l.lll (292J) (001)tlR/ 106Cgg1 1.5/5 -2JI2 1222 Rz =.9C(d IJw = 1327 SEE = 33.0 Tlx M1ypotM1<xis of no avsomrr<lation <anvot b<rtjenN. This <qvalpa xbnwz a m<an rargsl rmio or aesonal aav<nisivg m a<wynl+ns m m< sala of mnsumn gnoda (ov<r m< mf m period) M.<OgY. w0A a maae< d-AOnt%pm ynr. Th<las nr+wrurt fmMinsluwa adimlmml (lua we Aaw m<vvvsertd befm<TM1e mnn Iae e lffi qumers. wftA A.>5% d Ih< adjunmml la4iag pha m IM Fnl qvarla a0a a mainnined ia CG aM Onq 60.55% aomMe(al a(Is ma Ma rur. in AypmFCe IAat Ibe mtlfi<i<ms nf il,ll) arc sAe svm<fw tA<tor+ suqeeioda <onsia<rW 's njcnM n sh< 5% kM. lbe F-susink .nh l nq 68 d<grxo or rreWam u).91. Tbe probhzn xems to le wilA sbe m<Ifm'em of (T CG/, sinte for IM nrlier 1:<riod rAix meRi<ienl pexilive aM signif nl.'IAna wovN sevn a Aara b«n a tlpiifmn cAeng< M sA< Irmd or IA< d<sircd neap.alrcr adrnsisi~-nM ratio. Ir+ bwA avbpnloda. IM ~ kms o! slK Isgg<d depmaml variabkx arc mW knAantbal in(l.lll Owb<neqmlivnrm IAe 1956111-196if V p<riod is Ilc folbwing: NP=1.959CG+.058J9(PCGCO/- OI I Ie1TCG/+.6300NP1-11 L7.16) 102193/ IOUl88]/ (11161 (3.1<I i)a2 26g1 -2.8J5 a.)g8 Rr = 8565 DW=20M SEE=29.05 s<tJw.llseq.m.rMn t iauW w. n. +a <:apmsrd £0°0 556LS
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jun 11 a Fl in u, thal doHar : vnlue nf r' afier four Vua Icrnc EVVai ngshrsc Vun Vne. we uM.:n r=~Inli r Rl Thc relatien bcrwcm Ihe lert of adjunmem. ), aM IM1e sVeN nf adjussmncd in ma araai cixrcle mndaa n qnis dmMr. salmo.e Ibmlp~(Jg) imdim IAat a frection b Nthedirterms bnwxn p aM p• wi0 be mede up in orc 4uaner. Then it u eary b show IM1aI 1=1-rr. We wmpmM D tm b=.IQ 2q ....W; tM1C wrraponding A•s varieA from 105 l0 330J. Eq. (3.5) am -imalcd min4 bmh ord:nary Ivn squara and bildrNL-LU eslimalers aith CG rcylaad by ID CGI for eacM1 of IM ni:le D: 6otM1 axlimarors odaimd tM1e minimum sam of spuared errors at b-.qD. TM1e Gt wss wmse M Imns of the sum of sqvarM ermn shan witM1eol 1. inmlion d D.INme Ihat tM rtgrmion mnrW Hx same number of parameters as beforal'Dle same Mttem M1eld aMs /U CCI uM (D FCG CG3 replaced (CGI and IPCG CG) in (16) aM 13>I TAe M1Y W IMVis ef no inluat ute elfau obviouslY slands. Eq. ll.]I's thus eur bnt asimele M sM eggrcga4 narional sdvnsivng decislon fmxtion. Thec la4 eslimats provide iMirM evidm¢ gainu tlrc hYPUthas IM1aI advensily has bngdivd eRects on sala. If busimssas tbin4 Ihe impan or a Ao16rs wonh of adveneing pnaivs for .mme lime, orc .uub e.pxt thc imaeu rsm to fnllurna the ar.%ion to sM:M tivt dollar. l[ on thc olM1Cr MM, Ihe dfd7s eradvasiringdk awaY Vvickly, adverlising bccoms merc li4e a mrrent apemc aM ka /ike an mr Fosmally Ihn n dur from IAe fan Ihal fizing D= 1, as n aH mavious eV~lations, yidda IM1e bnl m aM comesFOnds ro an munbequa4GN inf alueot.talMtob=I.Thelmeorreasom,,n by mml:oning Ihe aiR uy roonmsuvicians M1are had in agrMns on IAe impormrwe nr 3m rr elfm n bminev ylant aM cqnip mem:pcwdinswhen ~ an.innwt~heranaaarcn.watoHar<h.: bng-lived a.cals. Eqa D.JI -I3 T aH imVb thm advenising adpsts mpNh to changa m saka. Ow prekrM eVUatim4 IJl4 mair'altt tinl 19.bS/• ar tbe adjunmem m mtaimd irc 'vs CG e aeaomplished 'm the qlontt inmwhidl lla•'msrrazaruvrs Orcrha[ I h aa)uslmem.'s aebiaed .. by tM1C eM N tlc semM ymme alld )5.3P/.'s compkld rt Ihe<M d.. N iAc M~im :f mcam M the IvSn 1/1 1 W:) IV M•ri:nl. in thc 1c:ulY sl ~nal a~lye majra m v EJI15". gmWa~ ashgMhaM np<:dwerrr.l I:NU! ItMW',nif Ihc nuc M f^^vd: rl <'<:. I•('<:,iwercev. incrraa by rc pemmnge Im a tM1S xrgn r wnu41 .x bY LUJg<5/% Thu~nwta vcrylttn oayx1ialcond: s.AM,as nmedabovr.I~M1Crc eridcnatAelsMlargel isras:o subjert to a msa crtal sIrma or ro inserat s ~ fMing orrapb adjuslmenl ir broadlY eonilnenl wilM1 our «svlts fer Lydb Ankhnm in ciulun L wAtte we f M IMI adverli.sing nas :mlcdiaHy a faM pttnnlage of anls in annuil dala. lt alwub elso ba that Illank (1961/ gmaally fouM lags or ka Ihan a ymr al ming po:nts in business aclivilY, tiwugh M1e samlde Inioa diRerd n Thn rnuh alsn indiola that smdies wAicb allemla lo rc the imlvn of advenising on demaM in amrual dets «iH mcaunter rc idenliGrmion Mobkm.rr We now minl erv irth's ame Paltem prcvails whm ezPenditures in iMividusl media arcconsiderrd. 14 Nmlonal Adcerruiiq by Mrdium Bassd 0n wr eaVeriwe mn J.l, we :ww invcligale folb«ivg modeh u anision eyualbsu ror natienal adrcrlising in indlrbwl med:a: A.1 AD=A~CGabsADq-11 A.II ADsh:CG+ArITCG)+DsAO(-Il Atil AD=b/CG+bs(FCC+CG) +bsAD(-1) A.IV ADab~Cfi+Aa(TCG)abs(ECDCC)+ArAq-I) A.v ADsb:CGabr(TCG) +AsIPCGtG)+A,IiVCGCG3 bs AD(-I) Nou(ion 's u M tbe lan saation, cattyt for AD, «hich u:ulioml aa.ania~ eaa,rditare :n a ~.nin,l.r mra:am ;n mixiona cr.nmt aalan Emh oNfmry Icasl sqnua aM bibrnda-La ar stt wem oamymN.lyieu bvtt fnrolrW ~rchm8 she range -.W m+.9e af ttnh nf .OS to find thal vslue er tM1e rirst ordv xrul correlatwn melf l shu minimizN Ihe wrmsrrd er xuirce In addisroa a xl ef nprrimenls vas pcrformef in whicM1 thc rariabk CG was splis -1090 656iS
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Fq1331izquilernsnnaMa.eattp~lorlMDurbin W mn oialc v laggea nnedaMve wellkno nlM1a~ niM1eprn ttnf l vananie txe Durhin- WaUOn zlalisrie iz MazN." Ilrna a devendrnl as Iow as I4a) dcfniUly cavus us lo worry ahom IM prescna of rrclalion. Using IM method or NildMh and Lu, we frnd IM1at tM m of sovarM rnNvals occors az an nlimald value of v, sM frsl o.dv rial carreUaon eMRCient d?0.lTnc n ge a-.90 + 90 wu ttannM at inUrvels of .03./ Adjuning ~M1c ztaMard rs aM ssznlistia to Ukc axount or tM simullanrous atimazion r p by an uymqotiullY man, methad propnsed bY Coolwr/19)111. se oxlain tM rollwNnBatimvze: NA = IS N CD + I rl4 CN +.~61 NA(-II 13A/ (g<St) 169841 (.346a1 1849 1.610 1.1)2 R' =.9931 DWa1.89o SEE _ )0g3 Reforc adluslin8 for ~M1e atimetion of "aI11aU<islia ware above 3.]0. Eq,13.4/nisnanumberofissusThef isM1Owbintwnnhntne addnional peramnnr, Pmntribms signif ntlY to zM mplanat0ry power M Ihc rc&nsion. This is a.peoal ux or tM Problsm or latm8 M1YMlhan in non-li~x.ar enimation. UMtt tM aczumqion of rotmailY-0i4t 6ukd ttmrs, bolh osdilwry lea.n sqoart and Inc mHMd or NiIdrtIM1 aM Lu yicM maaimwn likdilwod cszimalcs. Suds enimazars permit tM1e az of 1M1e IikeYrhaod es1. SalzWSC mat of tM 1»nrxtnao M afinnUd,. art fiaW. ~~ UMH IM null M1YMIM1CSis IMt tbcy have bnn fraed et their tme reluc0. ~M quvnlNY -211.a-L~) n arymqoluaRy d'utribnUd as Ai-spuam wilh. deg~es of frndem, wMre le u IM bgof IM IikeliM1OOd fmrcsion undn IM mdl xypolM1esis aM L~ 'n IM k8 of tM IReliM1OOd fuxziov wish no comtninzss° In ovr nse, tM lal suzislic iz: CS ~ N IqSSkws35R~/ ''~. wMre SSRo ard SSR~ arc tM swms orsqvartd rzsiduah from the I rimd aM unratriHN regrazlonr-aM N is me number ofohcern- tmna. I Ths n m01c.c eml it is known uvlinc r k:~d Iw of IM nuR hyl•nzbsi~ n IM1e cM1OZ siBnifaMe kvel rmplic.z1 °.z1° Rnk 119(91 suggeslz nl avprnech hasal on Ixe snMaN Fnnl f0r linnr modeh. In gnnral. Rea mends dividing IM1e co Iruz~ value of 8 bY a mewMl arbilrary corrMion facUr grcaler M1an or equal to nne, wlnd Uka nt IM {nnicular son Mnon-linnrity involved. Hn ergumml imvlics IM1as IM usual FInt wiil also g<nerallY rcjttv IM nvll hypmMSis nra onH~ man x a,ovla. m Riaaar U9s9r Mz inairazn+ eMl Rnks emr«,ion r.esor u aqva/ case Ther b, M esstt~s tM1az IM1e xaMard f-tat nsz M usad wnh sone confiaeme lo lal hYMlhne abom zM psramHn p c Inercfort us IM F-tnl nere aM m othn silumiom in rM1's drelvH mHM1OdsareemphaYed. WealsoemnlnrtMdmsquerc a: annm;xa aboaa. ror mmRanr.a Rmrann. ~ezCOmparin8133/ eM I144 zM Fsuliuk asw~iaUd wi1M1 th hYpa zhnis p= o is 1% with ox and 41 degrtss Mfr.edom The naosiatN cM1i-vluare staiHS whh orc ac8rn or rrudom u 401. Bmb signal rcjxtion 0f tM null hylrolheis az tM 10•/ kvel, aM Ine cb4sqner< ct Wis for rcjeation e15%. 1 We tctM tM nyyolMSis Inas 1M caeRsn'nta of CD aM CN arc equal m 3,44 Usin6 eitnn tM .divsUA or muaiuuea nrU z or tM meAidcm the axwaatW nsslistic was Im thm one Th'x suggmed tvin6lhe kllowin8 varank in plaa d CU aM CD . CG = Conmmqion ofDunbk aM Nan-Dnrabk Good; Fqual to CD plas CN AnutM1er laginl repluvnent varubU wouk M: RS ® Total ReUiI Sala in Mllivns M cvrrtnt doRarx snsOnallY adjuzlN at mmval rals Within tM Rcriod 1956 111- 196) IV, RS s s1i8MiY Urgcr tnan CG on a.<rage; 2429U verus 219.36. n e qune IiketY tnat wme xrricc eonsnmplbn e inNUded in RS Tnetwowio mnrc IogHha; tnesmpk mrralzr cxrtnamM1 is .9991. Wc,nc cc in Pcrcrmm su Rs in wn.~ ralnwa rn two rn.wrs Thc Rraz n mal n ir Rkar Ina Rs wnUim mmesov~,arMxrvicnaman«iazedwlshXllknatVOnaladvmsising C6S0 6S6i5
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STIMATING ADVERTISING'S EFFECIS J.I Imrnavci%on s cha0~cr surr<ys inc lilttamre duling wilh advenisin85 impsd on ~d.mana ~ w, arc m.inlr im.rcnaa in Ina moa<b mal nava nam oromd lo anlain «n,umd rtaPOme m.a.urtmng moud~ we .re ma.nw wiro mc rnum omaivca rram Ix rarims mmel< u N IM1e er or adver .nnBS,R n the lile oU^ained usin6 ordinary lean ryuarc. We rvggdlel in cnaqtt I thal ,ucb dlimata art rusPen, aM x caamise Ihu probkm m npredelail inAflttthen ®luntlery gsofsneliten mirad,il' xrvl lo awhas ttvn rcn~heory M1as lo Y aboul Ihe impaa of adveniring on spenammg beAarior. Sation <.3 & IM1US dnoled to an da a thr imqi«r r m waiy rnmry ana. m«u# roay b.r< xm aiu,nsea m Ina skr. u.c or Pa>awPhniv m Ilna comem. Secliom 0«b takc uP Propou-0 modtls of cvmusrrtr rupome ta advminng w< considd mJy medNS Prim,sily deagnd lo te Qama led tram rwn~Pesimcnw aa n. a rasinr orvmula rnn moaels ur«nsumtt ben,vior n.ve b«n implemented, nm Inis.PMOads r,iw tlimwhyuw ns abow hypdMxis knh~g aM msMe/ vdf~uliona M Ihe dnm alremmr. a litaaaar<nas grown up arovM me uu orcommlkd mPeri. .wm m w>k uwe, .m rs.bM1Milaq..e amxr..e SAwv tlattg ta a<baau~ R rne inda< certqliv ladve cularnrMuc Weudo oi d'~u s inis oacM1, m inly heeuxc kw rer (rM IM1 mulvn perform ruly ro ollaa el mxtnex rolln~glneadve ng outlays olalllrmslin an ndus,ry SracM1 con~irovl musl h mainla nM r a period ofswne kngth ifdyiwmic fadvrsarc ro be sludied. Finally. ~bere will ohm bc Probkms of conlaensialNY er nvdid d Panisvlar frms or braMa Is IM1us aPCUrs IM1m J we arc cva lo kam mucn abom IM1C Mal, M ndvttlivng wc mva do m throvgh IM,nelysis af smm. rapeeimmntnl dau. Tfie litmalvrc wmain, an afmosl ovmrndming varidy of slvais n Ilrc MNSS d Wvolisinb 8asicsllY• Ilrougn, Ibde on 6c dividM akgorirs_ Ihou con«mrd witn Ihe absohse lerel of aals ana thou aeding with marM share Tne droi¢ of qryrcaech dePends on bav uriovsly orrc sa ks 9oMm's (19<l) d etinclion bd wttn brimery dcmena' aM'aNdti.c demuW'. T nc fomw corses/uMr so she demand or Ihe smal ou1Pm orsn induslry, ark Ine lattd rcbla lo tM1e demaM esPeriem.M bY Panh.vlar frrma fr wnmmda g<raranr Nn deride M1ow mud d IM1, inauslryi omPd lo Pvrcnaa aM Ihm how much lM1ry witl buy from nch firm, s logi«I aPProacM1 wouM he lo dtimNe e dcmaM ru-ion far tle indvury u a whok and thcn lo s dlimal„qua- so Prcaitl Ibe markd sbare af ach frrm. On she mhtt M1and, ir Ini,distincsion m -idttod imponanL it e amsible Ie ey lo W Wid tle mld o(«eh Rsm alr2rly. Thm shc i~Muslry ddm~M curve isaMnd ss me rum orlhe nrm aevuna rumlbn,. wc ai«ud approaGw lo Prcd'u.'sing markd 4are m uqivn o.<. N,at .e lakc uP moaela tMl hasv n«n dnpbyaa ror eaqami...... l fism d iMuslry ula In sxlion <b w. Vns sne qualion or tne dyne- ~s af rapvwe in botn rrameworki Fm,lly, dnion 1.1,ummnnm ma rnaing, a rna rb.Pld. h~ aop.w m`~.es~ae ~ la.~~w•e ta'w.µi:e~~ll Naa aqm y rteme.un .r .t Iromap,rsi~v~ m~p~r+sgcnme.MMns..cllaan.•de.se M n..:.wn..x ellw rst.~h••,mn.nww.e k.rewe M Po..~ tlsul•roammypb~ vmflsssA ZT90 656'l5
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rn< lincar Iearnin8 m,dd" U,Wer hu auvmptionx tnis mod<I v i^dv. ri^gvisM1abk xom s fru-orda Markar m,dal As IM1em assumqiuru m be simihr ro mose amVbym lonm imC~ieiry) et man cmpiayl ork. wc discuu Inem M1erc. Supp^rt rhat thc xa^sition matru in a Markov madel u tbe umc for ali familin and IFaI P,rad,l+(I-rbr (4.1) As beforc, brr b the Kroraka delv runctian d i aM /. The panmetm may he ttdught d az she fnctim Mcv^sumcn whv wltl ^ever swilch braada The fnction a, u sFe peranlage W zwitden wM1O more to Ihe Jth hread: thc sum of IM1e ar mvu obvlously be uniry By dcfinitioq PAs+ II= EPyPArL (48) wherc rhe summarion b over all brsnds in tfie market Simx PAII u «obsNlNy rnal eam mvumn wix bry brad k wc mn identify X .ith Ihat braad's markct sharc, MSAtI. Makbg tne rvbrtimsion, (4.7) aad(ag) >ieM MSAr+ I/=.MSArI+(1 -rb. (<.9) wilh ssesdy-nalc mafkel fiares bcing IMa~ z KveM1n wriss the gam arM ku operators rm a Finar kamme mad J w rne im d.^d ia thc 611^wias f^mx wncre o, a,a k.rc poaeiw PAt+ I/ m PAr)+9,[B. -PApI ° WArII (gai^) (d.i% PAt + p= PAB - k.CPAp-1.,7 w NdPAp1 0«.) TM hrst M Ihes givs IM chsag in P, whm tM1e ilh brsrM e p^rchued in perlod r TM1C sewM eqvation spplirxwnm a,ry mlw brartl'o bovgM m Ihal period. Is xhouk be ckar tbat U, u tbe limn approxhe5 by P, u the isb bmrM 6 purcbasaL wnM1ous I^tenuplio^ f« a Iarge aumbc W pcriods. Similarly, (, c Inc I awa limn of P, u bracd f u rot purdased a Iarge avmbtt of perfudz B ~h numbc W brsnds i^ sbe market m m~slanl, wc lure .: ap>Ik.nk,i.ry ro a.. pmana 5.<x.,... x.ra~lr«.m.varweeae.pyra.mu !I }r rlo n bmnds. l'nal Kac aM A, ow meaaslalim~rnin8 mc rm forcall braMx Ilc ci iJrnlica ~rcal cvidmu for Ihis N Ihc cas d<sabluFN bmvdx aM Ihm na mar i^ oram ror Ik aam d tk r~ r m alw.y, acaal m,e. we an M1ase 9= A. We will prove Ih's auenion. mCOmNninB tne gain aM lov opcramrs from (d.10/. we navc P.(t + p ° Pk)Y,(PRII + (I - PAr/7NrIPAs/I /41x1 =1k - g)PAI)l +Ik + BU, - k- W„IPAr1+ kL,. Summin8 ovcr f md usmg tne Gp Yul Ue sum of thc PAr + IYs mms caual one wc oMain Incqwtion of inwrM: (d.IJ) ocGOmla.ttk P,L,- F«(a.6')toEUNforavy~YaP(amawmm«mamaaysnW 4's sbas sun q arry pnsitirc numbn ku Usn « waN so one, n 6 karly ^~sary aM rvBxiem Iha k= 9B.c sewrilc eq. NIl) wbn she equalhy 6dd'mg asd we dmtify purches probabiMia witn markdshmeaasbebre,welnve MSAI+O^(1L,IMSAr)+p4. (4.M) wiln Ihe flh stady-ctale marker share eqval to 4/&/y. Fq./4.14) wanof be dinl^guishM from cq. (<.9) ihua w< faa wfite a Gidy gmeml fi-rdu modei for sia/io^ary condilians: MSAr+II=AMSAr/+Br, wnq. £B,=I-A. (4.15) NMethat A must bc IM ame f« elt braMx Fq. (4.15) is m but a vSdW nartiag poim fur cmp'vinl work; IM vumption of v«La^8in8 prim a,d advMUfry eapmditura Nmmf vc noMS In 1he reel aorlq aM my xriovs work mva raeognbe this. Thc simpkV wsy lo i^mrynnh changirg markU wMilrom iMo eq. (4.15) 's ro make IM stmdyeute markn eMm e fuacUVn of suA variable as pris aN adsm'amg The prcrious srvdi« cpW hr xctia^ 3.1, ai rrc6 aa our ow^ work therc, besiceqy aasumaL eqvilibrium msrkm sbarea ey^af lo sharm W ertcni.e advexuivB r- a0 d theve G.90 656LS
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hFav mrle. m iM1C s a d< y leao.y ~n pM r<rcarrw' arrer_ almi ilura sR Mcmo~oh mrloY a dcied ~h< rclan Tlrc~rnad.< rcingandsakv naMCra aa nr m<mrcd<h mai narc in raai nc<n <mraor<d w~ngg«~ef r« ma4 ~rnott. dd MarknSFO.eMadrls Th fazt arkcs shera lik< Drobabili~is d m aalfyexdus aM zolkcM1xly<xhaaniv< <v add ~o reu'has induWva umbn M aamon m arrir -j- asr«naask vroav mod<k ~o ~M1c -y M brarA <h ardtt M sheir imrodu<sioq the m on d in<re arc znaorder 8<moulli fmorda Markov, aM linnr Inmin modcla W< now dittua nd brielly from a tnmrclkal kiF wn- viThe Bnwulli madd nass ihas tna probabiliry ftt 1. purcnax slrc ilh branq p!, k m ihc absens d<Fangc in pris « edve sing m IM mkvans markd The pemd mark<i shrc d n<fi bnM'k shm alw wnsnm. TM frsioMCr Markov moJ<k an sh oihn huM, assumm Ibm tn< probabililr lFrt any nour<hoW wiY purcbx any om of Ih< braMs n sh nvrk<r coasiaer<d k a Nnrcion af ihe hss braM bou8ht TFSi i; ihc probebility sha lh<kth wnwm« wig s.ir<h from bnM / w bnad is given br pli. iM m af shvs probabaisis nikd e ana n umW mashm when ex anal innumm Ipin. dininbmioa, ad.cn6ing nc) arc uxhang<d! In m eppliniioru, ssum<d lor all mmum<rs. a Thenlmearakarnin8 m'od<ISis basea on work io pryehobgy.'s The hrW'hesis s ~Fffi for ~Fe k~n houxlqld sh<Crobsbiliry of purdining bnad: in period (111 ) is Bivm 6r dlr+f) = d a U, Pf . (q a Mam 1 w,a par<harw m p<rirci r and nr db+p= t, - t, d(,) ir bnnd r w.a oi wrcna:m m D<roa r, whrc d,. d,, t, ana d,- arc voaisrc wmrmra Th<x swa eqnatiom art rdttrd to m the tireramre as gsin aM loss ..a nrcnrne sn N.Remm Se:.b fu.+1191q.M inn Wix rcMma nlo.n.M Mwnhrf19U4 z aMr<. ~Fm m~dN aasumes no chan8e in C c<* nr aavcr ask k hnw 1 1- ak6 p< und<r cnm)i~i .c Stran and Smnh i19M/ aM Mazry 1-1 fourtl ~Fm iMMarkov modN.ork W bcntt ihan ih<&r~wuiti approach a rw aggrega~<mm. on m<omer na<d. Massy rouM mas rh nypmnesk ma~ ina~.idnn ramnk, nad w arcn.ae Drnwnninin tLh 9<moai4 maa<p ooua iws bc rzjcaWa~or mms r.maies m hu amDkk for tnose families fw wM1ich is waz ckar ~Fat sh Markov model was appwpresa sh hrpoihne ar mmiinl in maias muW be r<;<mm rn<: ana mhr r<wk< na.< kd aa<.<mi aamoa w«am againsl vmCbslic aDCikasVon MLh Marknv madel'• 1(uMn 119dg, 1963n) aad Cermm (19fi6) nax fonM ihas sh< dmar karning madtl providn goad fu m indivHUal ramily dasa rlowcvm, Frank (I96I) Fas shown IF, sacF rcvha nn <m<rge rrom a Bcmoutli praan wisn airt<rem Curchau proFahilili<z among nourznoMSiz This sugg<s~s ihm iron-9cmoulli processa may Fave.arious probkms on ~nc iMivAUal kv<( bur Ihas fw o~e rn.ron « anWhr, shry caphm ag8r<8as< dau leirly w<R Mml aushon hazc bkm wd mad<h u e ning poim whm a~iemD~in6 to nplan marka ahra wlun atanal roMilions vary ov<r lim<. IX ih Iwo npn-B<mwM mad<k dissvaeQ sh< fMnr kemin8 aDrsoa<M1'ewMytn<monwrceCmallyappuling Wnikmm~pyshly derrved fmm an aaumChoa d ratinnd b<M1avior, n don amz mdbk u a d<.mipuon ornmum«i ins<ncliom wilh sh<ir envirunm<m. ihe Markov modd on rhe olhcr Fan4's purtly ad ho<, with no IM1eomid foundarions. M kambq mad<l Fow<vc. Fu a v<ry saious wukn<u Evm H gll mnsumen Fare the surc gam aM loa operasm; Ih eyussiom obainA by aggrcgerion .zc Iwp<Ivsslr ovmpkx." Mark<s dmm nm h uprusM u a fmxlion ar Iaggad sneres No wd probkm vi in thc Mukov framework x . mnn u9sp w aagg«r<a.:macna ia m<Drobkm d.ggr<garin ~Nnlq nmin4/.MFwrmh'sa..elu c~.nkeNrleM.~wa.ro'wd: r.<Em..hr.I~wf4M.vy.aeMarmw.09m{..e¢Aa.eaa119aA VS6Z4
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. ()niY M (rm rivg wirF si Jcrrm curve wi r, M eao~ WelsAus 4ave rM dunhron d eaDemed S =S- ,- s rtM1C rar of rne forttis rm s gvm by e f oEn, r. be rne case rM1al o„ s le ~r a 0. ~ a Ine firm csnnm d belftt v reragc rnan rM1C rrve curve. onThe error rerm in rM aarerr sing dsinan fvralmn now beeom<s TM I<rm vr now arisa rrem fallurc w folbw Iha advenixinR spmding ruk e+aclly. TM mverian¢ of tne Iwo srwtlura1 «rors's givw by e frrm s xpttlf a r or Iv,f aM IFe v s . md rM1e rrve aac mas~L ma n be rrregrira ra Asnagasirc covarian¢ ca nmaensusrce IAaI kasl spvarn wiil unden a,. bW ir makcs sucn bus mort liknir. Svbssisming inso IM exDrtssion ebove, we fnd fne bias ro be proDOrfionai lo --~-s ~roas ; k' where kx-4h,'(M(Z,ZheMIX,21'IMIX.XI]> U In Ina rax wMra v, ,M a, art alwan m kmi sqaarp win M mn- whrn me fmr foo,rs. wetl e possibk, rhe srign IX rAC tiu isciM sama az rle sign d er. if ua s ahvaR>sro. 11. (rm rollows iis advttlising Doliry rigNiy, aM d ess > er„ fAc sign d IM bua wip be opposire so Ihm d o, y In bmn IMa mfrcme n A morc li4ely Ihan o Drclimirury reazoning imqira fhafkmx v< spvera win uMcrcpmufc a. or murz rM rasuhs jun aemed dsDaN on fM aswmDSim mas mal sela do am alfi .avenismg mal onir aapenM aka mauar. 'aicMrMings raviawei m IMafan ormis saiion wggas md an assvmp win h valia on7 tl fhc a.b eovm Dsriodx sonsiaerablr shmfa manayvanar.orafncfirmorMavprynvaielFaFasayu'naairtaranay fromfheeggrcgsfeofalladrttlsen . d.) Uohr~irrrnryundl'slNr,rDhrslr. '/M usval tliuossivns ofconwrner sDenJing MMvinr ne rrcnmgcd. TI¢ nl w andr a n fmr rruV:rim, erM nxque cssMChan n 1rcxpaga M rM1 milAY rfun mrt 8as n/1956) ws fM 1-1 lo rhorougAly caplorc IFis apDroa .• BY diRCrcntiping Ihrwndilinns fm ' miliry wirF reyen la v whcrt ar'v anY Mrameftt vt Ihe ulilily funttion, Basmenn obuinW ~ LMUIkI Sa wMre ar s sM mnsumDlian dfh i1F good, MUIkI'n sM Danial dem.a- y vc d tlw milisy funcran wi1F rcspcn so a.. Sv s shc Simsky-/lkks subnilvlian serm bnwem goodx i aM k Ifhe compcwled oon pr4s eRCnk and I= MUIiNDr (or all i. Whik onlY IAa 5. f<rms en Ihe rig6x d Ie.N arc invariam againn a monmonk o-anuomuran a fM mniry mwfion. h k osiy:nown mal n. wmmaion on Ine r;gnf.hard siae d(d.N s inrariam omx orc raalk fbs tFe som ovcr k d P,Su o always rcro.' This's nd Im rcvnlfng howe.ec Associminn orar wsh IAS aavnnis ing d gooa I is purNY romrel; n, ~Y M any prampo whafew d she ulilhy fumaiort In en entmp so oblam mo insigM, we consHm a qrlkuhr fosm d fM vlililr fursclion. one in whkA adrpssirsg is wmption aurcgm5nfin8 m Ihe fotlnwirq xenxi We wDrax siras tAc v1i/FYfunr.fion' orrMfomr ~(D4eJXr.... • vYa.lx.l. whert all sM N art morwlorc irrvaasing.' In shk moatl an infem.q us Ihe adverlixirrg of good j iixrease fFC aDWrrnf umuumDlim d sMs good. rrofq nra.m,w waee hn p,.ra in..ukwov. arwiMr aene.ea my~n~:rx_ ~rMA'wslr.Maw.rnrMe.~.- fan*1M~wAa4'nhmm~qeonsu.inp r euvem nrwm.~y rinwr w,e sarxn+cn nnv.~ ..r rwu ..nM~a rae.tlr ew . 6t90 b55i5
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WnnUm- form.weM1ave ~1MUli1 _ 1 U„X,V' ~ h~l/,Vr, Ta m U' indKa,rs IM psnial derivativ< d U wi1M1 rcspM lo ils jrh ia tM1C frsl deriva~ive d V', aM b,i u thc Kro,eker della forslion M i aM l~ ITM1aI it b„'s one wbm i°j aM rtro olherwiae.l Subsrimling ~nese e.Ormsions inm (dAt wa oMain dvatry Su 'UVyI P~ f 5u J~ V /a.5) InnPMag. mis ia ieaa auml man /a q. rninga simMxr, now<rcr. ala s i. rewriua,i in «rmxdlxc ronow;ag aia,emo.~: eX, _s„Pr , _ P„=UoU;Xi h tlrc laass/ advcrlisirn ckukity d damaM, ar may nc IlrougM1~of as ~M1C nugmmtalion Naueity d aavMismg on IM jeF good, e„ s IM1e cam m«d kron/ pria ekukny. aM /f„ 's the in1Y of,M1e nurginal wifilY of gond i wiN rvpat lo mnsumplion ur good /, all adrertisin6 eapmditorn eonalar,t An tne.z 4uaalilus caqq Inc R's am clarry in 1 agaimt mm,afon'r Irerurmmatiom of U. R<wrilin8 10.51 in «rms orthes elaniatq we obtew direnly A„ n,ro,~a EenB.xJ. Id.61 tr h• im di«nly sddiuve, a® of tlhe P'a e.«q for Prr mq be utm to be ro. it's Inrn ckar lnal Ihc elfM dconmmVtion~tuqmeodng edvcr- uz is ommv a w« a~,basmson .rt . Rw arm h tnc rary x%aiai diraciy aaaxirc vaac Inc p«acme or Iha dx mstn h ham w sce wnat son A rntriniars rm ba %M on am ntunata or A, otha tbn yddiog-uD reyvneman¢ W tha svN mrt sadr as ~P,X,A~r ° 0. And,dweareJCalingwirndwJ<maMfuncrionfacinFafrtmmimlux,ry, aaJilivilY M1 nahk a iio anJ tlw hat of a c mrplete mbsl eaddingupcn .Nan valvc assY I IYbX Iwim ux ai/rrcuhY .0 ,Ft v N dassicsl wiliry IM1COrYawhrn mstas cnanec'" Ln a, bc anY%rammcr or nc~ wdxY rvnclioa wbkb may m maY nol be or Ihc rom, aiuvx,N above TM1en tle panul dcrivarirc M any d tne S° wnh «spM lo q w,Tty rundien aThat;mbe direcuonnor cM1angc d tM1Crmbri ut`wn ms dcpmds an the %nicular wNlna/ rc%menulion af tnc mnsw r's prt «n<n em0loYCd Tbe resvh mdirnlq perna% not>urptk- ingly,tbal ancocbaainlconsumm Ihwry,dcrivW onthebea'sMromianl imply onnw b< a t n n uendx in snualrons when uun M1ange c A numba of wri«rs have at«m%W IodW uw lhronn dmnrvmm' rcram'sc m adverCni,g rmm rnc wehervFtthna •hrv of %YCnophr- ia' This %o siti wv tWt tM1C pemlved immdty da simvlvy P, 's rchtaJ t~IManual intmaltY or tle atimulm A, saoNi,y to P=a L,(bA) orer smrc rekant nnge.1° Rw modem mnhoaa or e.apmimmlalioe M.c showo Ihal the 9a: a at baN ap%oaimatdy ruc fm me pnmomma In geaerak ror mou stimvli rahtbns ef tha fo~m P~ aA' aphm the dam beller, whem b may be ksa tnan « grwter lMn om. l'hoi d%yehobgisla no longm belk+e Ihc W<ber- Fahra formuhtbm wIry slnok ewnemi.ns acly en it? Hm f dehow n%ysfiopbYSiq qtmding tl to aonomin «yvirm tremeMOUan dad anem%bna perc.:veA adrenuiog mtm. si y may bvr no rcutioa lo pora,asing pMtans; il iao:n.my wdaery Ihat tn'a tehtbn'n simPk AM A.atema evm k.ts likdy that'%raivaa advartising imrnsity 's rcJated to donan M adr<rlising or cvm mcuagm parducd io a raahion na simpk n Ihe waY m wnid, the peraird rtngtn or an eknric .aMrk u MateC to tha anwi voluga emproy:d. xt Reside.e a might ba argued li'at %ia aad inmma em aho nimali. on a pr witn advmtising AM we know Gom a avmba duedin tbal liro rcmtien bnwaan aae.i miaa p.rrcirm ..ma, am p.ronaft .awm~.<a aa.ex.~i.mwaroMai,amlmn.bamia~aa~ Si90 6S6S5
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51954 0618 mwla vls p 9a a wsum+d qivv ay, P auweaw ays uod^ po v pnoD snoux'wsodw~ w w q91 au5 xpnpwd 8e woa FU^n a ww p+awa u Mu nveur!wtl¢nb w+ew!,o aqi wwJ w,o!w+d weyepA,ewayssry+srldw! a,4WOaw41xa4sPFU.paauxaM ays leyl+oys II¢4s aM pxoduy ss:. ~ wi We ~n ay+u»assaq wysnm on lo m/We ~ay,ew aqi u, avnW+d qe a.zo anpe. w olDau!w .n,Xay,pvowmawlZlm/P^e'U~AmJ 'q lmba os pau!wyvoa wu sw Ip (H :anoqe Wsn mWle w/ ar ul 'vrys uA,ew paesel apnpus Few q9n,en waWadaW! M ayl anys tonJ 'oJlrW ~3 + a s ovsw e snW 8u!molia ays .(q pauvwwns aq un pMOldwa q>pow ayy '[uun len sve4s uAaew ws>!w,d p wns ays wensuo> auou Lanppe a walqod sualenba swaueynuxs ayl Wlaw m,pnls myzJO py spuwq v.q Fluo+q oml wpaa>sa vqs ol awpuodsw ws wl Wwe4suoa-w^z Iou Flsm~po n al9n,u 8u!syanpe ayy's JuL w ww9 4U ayt uu 8u!puadc 8u!qzunw J91W 9 UVr w• Ya++•+w! mJ tma aa) adFi sU p sWeN p sXS lewz F9 PWU!P W¢+9 W a4z p salw q UYSW w4^ /61Y1 '[OVr1aa'v+/l-+VSw'o=VYSw ss IaPOw siH'i9-CS61 Da+ad a41 w swep mnMl nl^d^J ^aaUU p ulw aawero 169611 uow!S'AI¢u!j nii!wn..mVYSJ^ ~~, wl z^alunW myl p II¢ ul YiVS p anie+ wa3¢/ Wa vuJ an!Iqv 41!n Ww+oyrl asle varo sluawuaJV3 4uls'wanpe 4lsnpu! lewl p ve4s syue.q 4l ay, m s,uuJ 4V a41 A IO~S vaym Iel'e/ 'VSW>*bYSq+o-UVSW ,snpw vu.ee~> pue maq •wne>ys,oJ wml au!xolloJ a41 p^+alunW p uqwnu e lulewysa 141L6H sal>J u J!ua!s wro pMO1Jwa alqe4en 8u!s,uanpe a411o auou Ypuwq wa +alllP mJ mvall!P a9 0l Wmale wm s,'u ay, w4M Prv~wlsuoswnz sal9e!,es myz vam laww aylp uo!zan ov ul 'anilelv +o awlos4e pa 9wqu>npe Wa vI+J ry+nzeaw'Y wv.'J zal4vuun a41 i+u"` .vpea lo mvn w 8uye~nJ a al9a+un w>PUaJ>P w88e1 e lo .y.el >'ll µ.,ya~nzsp,.pz%U soy.+wJ p,. o!uwwi 1sr!l la u ymy Izzqmi s W,mw3 w~ ws..ywe vs ., aaPOw am,muno~ rylm ssu.p.. wlew!+n aH wae Pool awnsuoa saama.m Nuw9 x,4zm we4s uA,ew wz uo auisy ,vDe W. v!+d p vuanpw a4, vncww w PaWwas+e 189611 ss!aM s alqwap!su puWfqn zuy mey SwwU x'a41 zuasev nylo+nJ+wa'W!Jme FUes . Fylenb w vsueaw m pMOidw> IlannO wvs6s 8u!ssa, aql xnwagnuevy!u8!sm vm aslel aV, m,u : Law a4+ Yuo!m+aa, auos ui ~,eys uA,ew 8u!u!sidsa u! veVS 8u!sluanPe ue4+ lueuodw! u v»uo!We wWix-Flwopuw p suo!urs Wl Fq yvnseaw se 'F,!pnb pe seyl punol aH v+nnpuadaa +qlop se pas sa FUlenb 8u!s!1 n.zw 8w.4es p WJp ayt vnsaaw ol wlJwvle (909611 II'n^0 S u,tleya a FWZS s!4s o+wnlv aM'sw,y v!s Wsm oml .Gou ml ouz ueyz u,w,8 Fizuwyu&s wm UyS Jo slw! yaw ayy vuv.uW I nW pnW,d, e m uon~Ppe ays ynm YvueJwoa Tuae&> mfwu ns s{t p Wn mJ Wleun,µa ssm uopenW +eMw!s ¢'65'K61 w!ad ayl Joi TWwq som slua! L>w ayl u! voyu,e. ryqenpuuro wyy pw!wuuoawns pu sem alqq.w ^,yt Fpea0 spuwq uylo ila uo 8u!qWnw F9 -P ! wwq uo 9mul+anpe zam UYS aaym YSwUY"9/,1'SW ~bC'6ib1 mJ enP 8u!sn 'ppyvay~ pue aAusa FAa^~ xl>we~ +oJ [IVUedas w aollla4,wlewUw1296H+Wa18ulsunnPavlvee!aJOFpwseau~ ! uopuas pue anize5au sem 8uisyaanps nww p zw!a,yaoa aYZ We Vedw! w J!^8!s ou wy A+m,n.pe xe4wnd Jo w!oe xyw ,oj }vya azy6w m ~w81s e. pey 8u!qvwpe zeyvod p Iwa1 1^q'ann!s'od Fi+ue J!ua!s sw svnnpuadva 8w,vva.pe eipaw +e1wP I^ ; yaoaayls+aueapmj spuvqpe+oJ>wwaylvamsw>uyxu>Vl. '(pw!wu wns) am!I ile le spuw9 noa>e wn^we wxy a oz wns ol p>wwlsum vam yx4m p weu saiqe!mn wawadapw wn» p>FUidwa aH YK61 Jo ,aqwaaad w o8ea~yJ m zLw m Roe.4 12 W e+xueal> p spuey ww p n,e4s uA+ew ayi we1J.a w a8nos 11961/ sAueil qapowm4lpwlaP•n q41'mulayv-/msVVau eI p>sn alq uen Ju nywn n pug am pue Iew,Ww>ay,^ 'IaA+e isPua w+Jilea Fuu w wns ol ww~j um v>m aal4 . waWaJapw ay!'sWin~w
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e Jau. Significa aR k a( cu v<rlre ongsi eufrenlnan ,anJmoandvnu rcRrcic signif gnrlyAilfcrtMfran g o txc aMM1or's knnwl<dgc o••ly rwo publisbN HuJies M markn uutn a n bcx,v rirry rxc coadia ns d -r 4,2, applicerions of sl:e Io/lowin6 g<r:eral modd Drvposd by KucM ana Weiss119651~ ( k~(P,ItI]-"• MS,Ie)=rMS,Ir-II+(I-r/'M1Ckr[P~(r/]"• 14 ) +11-b1 k>(PA47'[CISA'</A .J. Txe <onstanr < relkcu rhe fora d inertv on purcxax d<cnions, end Tis rnc fra< of tM m which's inllu<ncalby h< adv< par,m< and <, rs hc xa vhy d acmMM m and adv< sing rhik dx k nllow nc~'in c aDpear d IM braads- diRC< riabk5,lr/scisxnrb<irhfrmi(arthcithbrandSladre smg in perro2 e ar in sso3 d 4oodwill ®kuhrei by dMrauting ~snahe<ftstunud. tlays e o.n a mad d Kvehn n aL S69 Ix .<qeal ro < vaanemiag ao x,ea t(ormat~o « mPn•m- TIU<mod<I waa fnN so foM y<an d bimonrhh aa.xrrivn& pritX artl marktl sharc dan ror four major bnsMs d a graary produn in one opoliran mshn. Param<sm werc cnosm using a xaM tecM1npue ttlheavmdsquaMrcakuahHOtnudsignif «ewen peseMM. Tne ntimated udue d 6 wss .925, irMi®tin6 rhM m purchara wer< ~ aR<cted by adv<n'niag TM l~Mn admtisirq NaHicila d marktl sharc f« all row Israrrds wac arimatM to bc kn IM1an.19. Thecer<n whm m M1abn roMSetian wvussumed, the inlluens of adr<rsi n (s19ing69) wn nsimuted te be stignt. perrormed a imilM unslyfe d bimonthy dau ror rhraebnrMs da low cosr reod iran» the CTiago meuopoliun erea Ha too. assomed r= 0. Hs ntimarc d b wu .95>, implymg nm Im me mraslvenbiag m hqbicmimnn dthe aawresirqaaatioty dmartn ahar<w<m.n weR bdow.ol. As.DOVq ro aigrdgisarrs teHa w<r< prusMM. Wei.<s did m,nfmm a sn d nperimmla u.ting Isgg<d adrvlising in Dlao: d c.rmM advenuing bM th nsulb wert ssot xnabk In publishalHUJm ar4n.<M1nr<Jne •nprovid< thrk <vN<n lishrg, MoH atig:u iu nnpby mrvJC/x rharcJ ~ol i•nDOxsrla mnslninn wM1ich arc<ntt<sc•ry a Drion mar4n shern ro sum ro one, urd nnM tesr shcs mnHr,ieu smia i<ailY as a chttk for sDttifrcasion nror.1° Thc Iwo paMrsjua discusttd do impott nc, connraims, bur rM1ey do nor allow for habJ formalion or Inming beM1avior. Finally, oone d thcz atudim m~skers Ihe snnvl- tanmux equations Droblem, aM aB art sospca rm rnar roson. <.5. SrWicsofFirmaMlMunrySeka TM1is sarion dittusm onty emryrinl asudia ttur xav< sought ro dcr<rmirrc Ihc <RMS dadvertisirrg on firm aM indunry d<mand,as nn genmel thmrnkal modeh havc bttn proposM to gvide work m thu <a.W<(rsr singk<qusonmodekofiMuHrydemandardlhm d<al wiln Ihore~examinin6 Ixe dnnaM rar the wtp« d a pmricvlar firm Thc survey mMludn wi1M1 an aamination d r<unl work which recagnirs arM assempts to d<al wiU the simMranmus eqwliom bkm Wirhm n<h d rnex hudings, we nml Hudia gmmally in rh<ordcr drheir publi«Ibn. Sehoenberg 119))/ n11ma1W Ih rollowirrg dmraad furMion br cigamtn usmg dau rm 192)-)I: •X=12580-BU.ay+l.9w+dl.ls (42a) (10.1) (<A1 (10.8) -1.50 I.BU G.)6 ga m .996 SEE e 120 Figurcs in partnlxnn art sundurd crron; thc vamtiated r-HStistin aDpcar b<low th<m.ThequaMity SEE's Ih<HarMaM<nw dtk rcgns en Thc dcp<rM<M rariabk e cigartlte ceMUmprion pn upi4, Y is fie wholnek pri¢ of Gmek pa thouartl dtllnM by the Whokvk Pria lMU, w e toul «wspaDe advenuing by rhe fwr kading agarcr nufanum; vrd r is time measural in yeara The coe?rtknt ef w olsignA®nt ut rh< IOY. kv<I. TM1C aca W inl Muay d'd n ai+Rar veld Mc¢sms 11961) ,<yanaG on a Stanrord g<svrd (n titur< invnrigurVOe imo rb< saks 0Z90 bS6:S
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>s 4aW. sm,.a IwqllPpa a7.w ylu>ua9 pl. ~ wl aipq.aay ,>y~ad ImapYUwadwo>wnpow>aAa41"n.(qllo>4UIs/1'aua> Punu>p>al>y, twuw u J wln'%rvxwaww wal aq nlds>4 uw ,sovq p mw a4/. a8epee vo >v.>w ve sea,et5>Oaa qs 1e41 e ap 'c/n Pv.vd>a np v>Itt' laaue wu g vaye (Ill vDa lu Wws>yl apy.qlm ryyl <yNea4 >41 uayD vnou7 we clas Impe vopy •po1,N oorcwP 4>a p uels>411e q ve suenua> Au,A,wpe >a41 soddlK a.~lqau >y ot RI>%4 s, aweuwm AII, Y aow uo4s w D>ISad uaM1UaD>4111 Te!y asissHw e mapo <ew ksop an'y8nou ae,q pov wle8ao c mw,ww mv> ays k'We4 mWO vp up 9urw,l,apa P t>v >4) be,vaso glw w weabt uq pue ws WI .x aalun v auapueitej~aasa ayl P.toy wum6w 'v p aleuo,ls> saaea/v.,.W a41 P yw4 ~yl!yWo>d>41 ro>a a so>ny ays p u>m N4, ~4Fldux Yyemda ptep !{IU11u1dmGa v b lo a,ewqn waoM K.al ayl Lays 71.uu n rt'e'>wq,enw nua>yl a 8oq ry atqdwa vv ayuueab my) su tuonwnryo 2 J NI suyx X4 ~ Z o0!1 rnbunrsnrea»4, lAenD!^vpvmwsaNmw.a>Y,A(LpuaWu IFN Yx'xHV/,tz'xNV-IZ'zUV°l1kA.tk 1e41 moys ~yst> uea c.r. 7ww>e ul Z Wa X lo lu ;,yam ow,tl m> ayl p.>.>ym 11-111Z'ZIN'se u>/wm ay 4w uols»dv»y/ u>y, /su¢awaazveyZWaX4,n4urywu»ppvAyle.ule8au +wu ifemla q I(Pi lo m,ewweuaP a4, w~•y ewAplliaw uua, a41 9x'u4 ~Ila,toNUS<se ve wewi,w ,enEasq pue b.n mu v, so'amqe paaLe an n suolloalls Iu>w ul ~epaleuulasa.enbs Ke>Ia4a W.'wvs<sa.rs,nw eue 11'VlssDa ValWwmua ve swml m o.xl >4> P. We osss u~o JI u>>,ylssad ve s4aw >lowutlsa x~ay,o a>wr'pawyp'//am ve a.o4e sY.w4>4,!!e u4, xunssa a,P 'IrIZ1,1X ~ ~ w4 =(Z'xlw tz~3 ~ w~.i =1z'nw'.olx ~3'~~w!i =/x.rur 51955 Ob13 /r~ .ftz'x)wlalz'xlrv-IZ'21wI,`a+(:~>:a~r~.a~aay_.. 1~~ ~n)I'o -11 >=(as-1P/w4d amwed ay, lo' wnlin sa,eaDS iml >4, p¢p X,aMw6te >ya mi slasaa IZ2 d Y5611 s,,>uo>yu>)uo,q aney a. vq,ryv v'.4s wa 8uumoi:u encapeemPr{,lovalawa,etl>4,pn ol Pe+l Il~m sasenbs ,m>i .(.em,WO'411u>pua6aDUWWan4!u? p puewapay,wmvmvaay,pue4umYa.Peauls lou........ 'tnon u¢4a saf s!'n pue ~n>o impwd ay, ,e4, xunase sa4, Ilryt aM'>'m ue4, n>19 (te`sI F. Nuo poeN o>n yaewOda P>sNnw ~pawt >yl ss m,x(t snowqlnons-um e N MaM Nt se W.ap!rvo> >y llyrsvx uq vaye ms(s mwoeAaous a4. '.a1J~aos.d vo>PUad savo7, IW1611 ssayA j p su,as ol isuauuawb>, alyrsu>s waas xa41 'W1nls n uon~pow Ay, ll Noo We P. ~41o u81s ay, ane4lCm 2 W uanyw> uo J%>apaa ayl'Slseliw!S'a.ye8>u s~ ~41~ n~ylueab 4m4 >sevaaP a pue assUSai s~'4P. 9mm>a~pe Pue s>Iw xo.au~ o,>q ylm XB.xmaew.Ma wx0'R4aaoo4,ss>!>!~npuesnloynlmm>4s/1 pxJnoap,m(»esxmsenW ywg weou,qw pausap u, yrym sluesem va s~ pns sp Yp ayy +rt pee M evuw m„a wsl a41 Jo 111uapuxlaPul pala4~slvP t>!s!suea0 snouoeosa a.e Z We X at,rym'.(ry.n»da. sales We 8ursnunPe ve S Pue Y tai4m.e. a'il 1~61 n*>+Z9+Sao X4+Yo la7m anD>u snaP 8ulapanPa pue puewap anv >y, u'1 p>leyena ptv+lp aq on sap ~IOWwFSe paydwl ay11o tuva pue vnseu aya'aso 1hiYws ayi ul ay y~m puvw>P uo veJwl sbolnu>npe lo sa osvry sAp daoauta upl~spuadcp 8olsuanpe rv.vnae v/4~ w~ve ays q '1 te4>wpava, tq'3sslua~aFypanayeRlBoo!ale~uasv .w,pe qep ~V>i+eaE 4,Im ov tqes a&IUwaJ Wv u 8umuaspe eleP Rnooe m,e4i vw!Pu~ s,insv snp qn> uois.vp 8ols~u>nPe>1e8v98e>4, lo o~weo[p a41 Wu+w<n an We'>x,ae,d q Wmollol ve sqn.4aas,ey, »u.pin> aaVlml Wlua.a,J>.'[ nidey> ul ~•v>4 ae~e~wndo wa,l yo:>, uo wlas yv~s ,ny, pamu4s «le ap aaeW~y 3u,x,m~ne ameg q alm sqnayoAOU>wal a.upq w,9 ,ava wPaes,m n,v„kPnu Iaplawa la,avwaa e p>„a>s z,xdav~ .aleswy,a,~na,nmw..,la..ys rs
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mignr x< arROa ma~ .a <::Nwr y<ar. aw+: a, no~xi m morta. mn w, kd ixax R~~<~ nk ross g da~, :,IM1 aaJv<n.inwR f~g~r wnuU sa ttceniia/ o k<edxn e.naVU aJ my aruM1kl, Jcry a14-t wn<rcapprnp ~c. Tahk 5.t giv<, an indintion M the ebem io whid proEU<tion aM saks dcigm<bn art conanlra(M m tls naMS of (xe largw su fmu m(ne indus~ry. Thu pa~~cm hoMs 'u, yurs mMr than 965 ax w<8. vcry m~k would xem ro be brt by (remi~ ihc bp su firma as (h< o:al induury a:d nc8hctin8 ah<minm produttrx Thm tne nudY wi0 a(m<ler8<a(sur ssir(neywert(xeonydgareiumanulacinr<rs (rtx is im<r<.Mg (o <.amin< (h< emoma w w.<nising dwu M ih< indubry. Tabk 53 premu the arcrag ra(io d advcnising ro uks arM to 8ron profn ps dKa<d ahovq fw rnc s'w mapr fimn kom 19556t, alon6 with tM caRsknu Mvarblion N(M1<a ra(io%" T:<rt -- IehiawM1N.w m:ai.Nmn nuuyuww i i(.r.:a.e:o-tnnm..a an vfsbl fres n.<eur.u. utm fm~i: Mmey'c IMUmeh.., ew~M.e :Ilamus figwm<sk pMn ro r.1e uamr ~r. k, (®.daM<i/.cmrac M ~mr n~b ta NI M nCpmu+nb n. pemiuaeM:aN tlprzn<,.4aM.R N. rme. to ne a IuMenry fw ahe Isrger firne to .dvtttbc kse relali.e t: thir erse Um.maOaeump.nies: a<discus (hu h<ICw. io pul Ihae per<enlaga in Mrytttirt .< on mmldu olhn i:ku.erie.c Aavrdirg lo the Im<ma18<vmu<S<rvks, Tona¢o manv Qa9vuan mt{ATabRx.aane„~.a/rpl.qr-CMC..arrtsewb .Rb~y f b mralnJ pWvnm m~ .l,mWM<YUknfRamrMaC.e.mwapLLYaume Ar:Vp '.pla. a u. xnaaiN.Nr.l.au e Je.n,u:ynygn. pN. n4. 6Z90 63619
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aJv<r:isir:g-sales sysrem :rr:J ind:calM rhal lan spuam nrimsks of Upwnrds. eing.<Iftt alt n yFiaacJ cfincwid<vainyer( ar4asnanm.vlehrMlM1arebecn< malcJ ainM rM1 m ol IM1 idef sM1 res nilY,lne.<sulls ttaMrneotM1<rstuJia vcY<dsugg<nn1 Iha~nJvmrnin8 wus rrmf paniculaslY imponam in dncrmining mar4n anan efng ro mnaas a<vosN In <xpivining sa~c ramc Ihan mark<s aharr. w< in faarM few sua'essful eROns lo defav advenisings mc. N<rcasimuhamorxi ryualion tahnpua hax bem vkd. but outgr<atpnyoR w Givm thc kd d rtliabk eslimala d d<msM pamm~tt4 it was suryrising rhal lncn wes no gexrJ mnxvus m ax IitttaWn aboutmMOprunspccif IionMd<mardrAalions.MOStmvcstigatun, roopga wnn w<rc <on«m<d wilh advcnisings dynam's cRMa pestu- lard lag xrr,aortt wbicn mar onm x,a<pea<q apmo.+ma<a Fr m< mpk Royck spaifialion. sr If a hundrW invesligalon leke diRercm vmpks d thc vme sae on ,vn,ge, wiR npmt d two ind<pe:sd<m rarMOm vuiaMex, 61 mmp4 corrclaliom sl iuRy signif ns m Ih< fis p<rs.<nl levd. Hin¢ h s nd sufpriirng, in view d IM1e numbn d studie undenakm, sampks se YkNed signifiam stimata d sdutttuinBs eRttrs on saka t1n pru9ominanz d mpti.e Rnd ingc shougF, auggesss Ihx s mon snuar:ons n nm s mpk slsb4 runnan d advcr t sing."tt A STUDY OF US CIGARETIE ADVERTISING: BACKGROUND AND METHOD S.I lnt.oductbn Th'nsmdr hm. numbv dporµnna Wc wisfs m shov how In< <onaws d<vebped'm nrlier Aaptcn un bc spplkd lo draw m:mlusions ebout sdvcneings impzct m demarM Ore aim, thcnforc, u mnhedobg(al; eahibit ar:e epproa<h to a ammm probkm. weMCtnadology for ils own sak< e dlimitaa int<t<9 Iww<rm. Om xcmd mam sim s to r<adr positix condusime about tne impct of adv<n'ning in , pencular industry. Wn win dfaw such rwrmanrc inkrwn from eur rewha as we an. Fa bmh thw< antN puryeecy th< dgansk 4Muxry h a poE cheire fw sudY Tn<mbject d dprth Wvertkmg srd iu rcmktbn nu h<m mwA an the newa d kte preum,biY tnez vvno gzi tnm dgnr.mc adv<naing ahauk h< limh<d or bemsd re<ttnx aoirp n wonk loxm the cde d dgarettn Rut at ksn mx obsrver. Viecmt T. Weailewaki pr<sidml d the Nenond Aassution d RroadmNm, kck tnat dimirutir:g agar<Ix sdwtuhrg m sh bro.dmn md: win mt alfm the tmtl ak, ddgnrettn Mr. Wasikwski toM th<gnnn< commva CanmmcCs Consmm~ subwmmiu« snm ir broaausl ,e.<naing wm<atopyd.'Th<y [tn<cig.rmx m.npramnr<rsj win r..n fldt milr xhh gnR know4age tlw mnnumpion d cigereue .in aearou .- CkariY.oalnkisrx<dmherea<tncnuhnkcviams that mn be used to auppon m rduk Mr. Wasilexkis emrmtion. Tob.vw nNenn akdN ~absan na 9a ~. xtu Naw Ya4 Twea sab }7, r<es 9290 655.5
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W M1.n 1 eJ J<pc^Jen riaMC w s aJJCJ ~n n, signifc:r ncFV~i n IM1C rtsiJvals w rcrcJ. Thc IIi1JraM1 Lurc a sMrw'Nntl e<odfrcie d IM1C InggN JeMnJen zme signiM1rca i 10"/. bm :sm m s"/, m eny ca1 . o ixr TFC 1,g: w a . wa nra a.M=u m. pi.s a.nn.. anJ lk uuaot m ork radio as dx ing rdmi snln. Bv, cpvalmns ftxd 1. 1956 111-196) IV snow ~mcvidcna dcFangc n IM Iarget -o. Th< nypotM1etis of rw xrial wntlalion rannm bc mjated. ana lk Fal asnmaa ie: NR =.05655 CG 1 .9559 NRI-I I 1!l191 1016)9/ IOFSadI ]n0 LtOB R' =.)562 ow.=nu SEE=4601 This eqva~ion is by no meam compkxlY anialac~orY. TFC R' u mx of IM1e IowesM .rc M1ave mwvnxrcd, and tna cveRd<m of tFe Iaggcd depen- dem rarbbk n avsfnciovsly Urge. 11 is diR It lo believe Ihel only la.ar/, d aelrvslmcm i^ onal advcrlaing m nnlwork nElo laku plaa in tM fm pvaner nM,lbas only a6.M% b cvmMelad a11M1C rnd d om Yre; Luckily, tk M1as been a sma/l uxg^ry i^ rtant yurs; Ibe iMimxd sarger rva n only V25)% BNOrt summariung our alimals for IFC individval mcdia arM com- panng eMn wilh dwx dsM1e 1.11 eMion twvvbservations erc i^ ordtt. Firsl, vaM ror mlwmk ndio, we f M~a evkma d ~wliaaWc changn in tnc lag snunvra avmciatcd with mdiridval mdia. 1M ehangs onr limc werc maiMy in Ihe largn adrMiamg-salrs nlio and ' troM. glank (1962 pp. 20.E1) fovnd miard nidma on ths pdnl. in~~ M nme tFat nore d IM1e indivWVal mcd'a eqvstiom havc an R' aa larg< a(J.)M1 which implis tFert art faaors inBUmcing Ihc choisdmcdia tMl wehare ~ws takm ima aaovnt.lt xems rrasonabk ori tnx Inis wrovk be Ihe wc givw tM1e simplialy of our s9erif- vrc rorad te makekrtcana dsmal spmding on nati^nal adrtrl img in major mcdia, w'e woWd ux ep.l).91. mthn Ihan adding up tFC Maaicliom of tlrc itMividual mrQn cpvatien; Givm tnc imMr- kci speciGOlian dom med'n epuetions, tFerc aa probabty gaim from a~egeloninlhissnmtion's SaervMetl.MGnfennllsmt . I migm imprn f rno cp n. di,waxd rm+ by nr~ ging in iM1e cwo.re.^marvn dm JcrdnMd in apMnJis A. li ia Fnw . ckar Inal W n wnok vu mfy; ~FC avFaiilusnncamn ocncN by c Iban rc pritt; A<cnmfng m apa ILJ q^:N on9k Iln v.sa d vawmk lelerision wv incrwsing raMdly rtklirc 1. CG. asM B:c ux of nNwork radio waz asmtially slndy. Erom 19561Frough 196), tnc CPM iMea for ^elwork Ickvision ktl II% wM1ik fm nelwvrk radiv il kB ll% Alw, thc indu fm spd tckvi.aon rox 3% aM tM1e iiMca fm spt redio RII R% Ilwvgh ux d spm xkvision was on lk incruac aM Ihat d spolradivonlFcJecnzxClmay,rtlatisepriawac~wlthcwhokstory. u may wm be mat almi.e p.xcdfxls wuM nnneaMain tncdaEne m tM1C ron-broadost mcd'a m this Mriaq sincc nll thc auorietN CPM iMice rox mom repidly than IM1c oremll iMea. Evn^ hert slwugk IFe la4 of a IreM in magazix; tM inan for which rox 21 % in tne qesena d dMinn in nevspapm and businm paptt; wM1Ox iMica oxM%aM20'/ issvryriring r ErmwilFOUtimprovMspttif liona~uluralxchniqvetoapplyin Ihe aoG d ztual qn'n Zdlncr's 119621 rsl imatar fm'saminglY vnxhl W 'mrs. Th'n trAnqve um tna eamanpmanwus wvarumq d ILe mors of the FMiridval eqvatfom lo inarex tne dgicwvxy d pra- on. Unf -Y. R is pvile burdmsome to emMoY ths approadmntlM1e Ineunm of avtomrrclativn, aM + is nm uxd hae Tabk).4summes¢e tsrmsFe195 6 111-19 6)IVpcqE. TFe mrtnpoMma bnwcm lk imqioliom d eq. 0.2/ aM thae d the set dapuasiom fm ~ he iMi.idval med'u ie geMrallY pvite saeqabk TM1n tmal d tLe araege larget ratps from tFe iMirNuN med'a equa- a dt brga IFan dx valuc asimatW by cp.13.)F Fvl Ox dif- krma e q m mam diavrbing The individual med: e9uafiona wnfi~m the padMion of . Iratl in tnn ntio, whik ckvrly echibting the rtplsmnen dmhc med'u by tekv'eqn. EarzM fa magavne aM wmk mdio. aB the mcd'u e9ualimu iMicax sbona /ags tnen IY.)/. The 'n pvlups nm ovttly surpriang.'a In any ax. both rels d esti~ e i~Ni®k rapk adjuvmmt d adrenning lo x4s. Tbe maa disturdng itan m ubk )< rcbta to the cydial xnsni.iry mp..fm! ~sPalyY•k.es m Meemm.mn nraxRr Im ~aaa wekvMaoaVdn mi.a S090 656i5
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51954 0630 Ww! aqs azx. ot apew xax. swuuue as!t.ulueaC o.a, puo tnq ~w<re.euod [Vea pua+e.¢aW ayi u aw,puah 8umisaepe uo Inosew ~nw paxalum 4tsnpw aNareau ays P lpMS /156i) sNOqa!N Nww ' 1Fluoaqssueaww.tqsz useyslnq'Wewapouqpue4sinDU! ~oq euluuu+alaD u! Nuuoduu, sw au!sryx.pe wyt sen Wys'oaenV wa Ilwaeo quap+o9 .~': "vnxpudra 8u!uuaspe P lya!>n. ays P uo!papv vv!p e pu q puwq RueP „onp. qeg,•sNS aess ot wa. xt Nq'.ryuwap Iw+J m Wwql ausa>Ix 'lo srvaupu>Pp uuadeq aww ayt P auo ? ewsiuaspv... trys Pan&e aye uap+o8 +5 4wswd se:: s..v wm+ seqt Wpalwoa q'py6t os+wW vea.( ayt 8munoa qap p asFpoe ue woaj'uqiwnl wap v vewys> Fllewsal wu pp a4 4ano4t'qn vUaoan telos uo , 4anpe aNVeau p axduu, ayt pau!wara IIIA'qa TD61) uap+oN (Z61ol+o!W'vwF.(peaayt ~ uvduu s,aurs!uxpe iwqe awywu sFVS vyt aunoa Jp'psal %01 u pu81s wu x. u tnq v.ursod xw &p!yanpe lo wa!„~laoa Vl'Ym,9w.pe udqs.au +ol n+ntfpuadra nIMD We •aw!t slawq a„sd IWteWpl a4t vas qqeuen wapuadaWi a4t pne'epJw,ad e.x alqeuen wapuadaD ayt'IC-C261 veaF ayt o+ w rya+ Wewap aew!1 e pet J([C611 &aquwqa$ •+aded Fpw ua ul sa+Yn+SSnoina+J fS 'wllel xe4 soNe+4to9'0961 aawY wux uauw ayl at mp te4t Wes mol FiW~aaJ.aun s ryM1l w dwnf a4I ,ol uoueoeiJra nuya yow aq,L WOI .~.GJ+rys av pue'C9n1 Pn^ LYM1I w x0,'1961 un Ital w4~ u:nuavai 4wN .~Mfil ~pno+~p 554/ wo+l Fppexs asu+ J~oW s.,+,aw,o „le, w• awwa+w e,e an!s!va.pv ntrel „n m-.:w s INmme6Nwn6e%wl~laVeu.ex'9w.uylauuwtSll xn5. w.~~...rv tnnqe pua +ea.( nw+ol aVS w eu!Wxls eursuuspe leuuueu IIe lo %[ ( +ol pawn0aae sw+l as aqt'8 a WaJde w yetot aqt ot au:p+ovv {S61 ua~il!w >I1Y qt~M D»edwoa se'C96/ u~ eumua..pe oo uoqNw 0>CY Inaqe tuaJs u4w~+~+l,ofew ns Iie •J vpuaJJe u! Wuodv sy 8wv anpea snpwuy~o vlss anpe 4t!^ Cfsavel SY61 n awsu P o+telpp'q s W.a lo s waa tN S wW e+uads vv u l
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ssaws~p pue twixe8ew uue) pue iv+aue8 vadeCSww :n,paw tu~W aytw Jwtl+qs4tFqww,uarqa~ww+sgppu9Hn,qaqutuws tay. prytyyoA anty sanm8 aput apaw qoiW teetmC ayt +od ~~z• ya+ai Jo nw1 u.u wosvuaum «, Mq 8uiywpu pwI w asws a,uuq tpa w i®F auo Fur p psn aq un 9uR&a+pe ~ed+.w'yquy le) uw,rpuw Huoll'awn uno wezvm H+nJ a9 ~atsT+l z'u4t l91 Wu uaF ua.~8 Fue u sutle4swau W p8pny 9wnya.pa n,ayt P sun!Wl ~w,waq H+e+u zoollu sw+tl 0e l+) w41 4uoavu si u, w+) Wea M 8u,w,yatps lewt ~yi tul h^ad puo6 e u aaz ol s+ra vyt +nl +aNu ul'uwF/wa.zNY+!ud¢awFZCyz+uuw ltla+MSUCaQ s.w Fn wrvpw m Huo u mvsau uo an&„ay wo zoaang .pymssw,FUldwa qpnz ayw w pontanmw aq x18w tryt vuslyw4 uo Jy848utppays HIn1wW We'aW uc4t Fopwa ot ~~~ F4z ~n~W' ~tnt alep y ax an!mpui amm bx1 aayl snx~p qsys ak, ,LUnpui w ayt ,q wro ar,.+>s aniwaa rvwaml arc.~ wr+S uy.a mJ ayqlsna an wpaw Le wu wq zuos w, 9u~pua@ 8w,uuanpa 8m»wa a+~d '[9615f61 pn!t~ u4t Huu +anw , z Hmqwnpe anp 5:959 0E33 =a w.a t.a nana:. i~.p a ------ - ----- - - ----
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51954 0622 ue J!u&ssexryqn,+ne^!s!uanpv+>yxau ue'f[0' tryo p ea w W4 i4eues wapuadap >qs sv aln s.8 ypn rav8va411v>IYAIa4t1eN J!u&sNUlnqqalvdnss'wna8w e. au!vl»npv s,B N Iw! L>w >41 1>"al %! a41 le w Puss pue .qnotl se.e 8u!v1u..W s.V p lu>!x,Uao> a41 ~d61 y41 p qep>ol aq 18u!sW>m pu'Sq' p ra w pW ales s,y 8u!wvldva uwcwnu a41 B IoBuml,ape 4yx IPa ®•) Wsqwm H4&4.ex p ew.yluepe'HvaunuoJu[) pouatl 4wow ns ayl fuunD wwy ayl w Ie41 n w V,%spe au!4au ayze5ew p~wnu ayl sen!w! wel aql w8up!lu.pc p v^saw Iva!eq e u yanw 4s. Nu p!p spe 41p s!s ayl We twpe8ew r4 Huo Pas!I+anDe a We tl 4109 stlrrw8 m qpw va. apwdw~raqwnu W va py'uo!aas We w!IWwo rqle>npa Y.el> • pwel ays m, a!duad p aaqwnu 'pM4 +srro4 p P®rl p>au'vrs 4u va.u qqeue. NapuatlaW! 8u!vlunpe unN 'W!+rl 4NUw-.u v 9uunD H!urel rpw !q g We w p svep rnd IeNI ayr myl wx aa,en+8v sy ur alqwsw IwWS+d>p ayl, sW!nd sywow Nl s>N!wH VUS'1 ru >IVeI!eu uwlwuolw, PaUel>D W4 A++qoa u4+wxVOmu,4lwoqe9o!yrw naayNayl,vu nWetaies .tl BwweWva ualanW ayl ui pupnprr! sax 8wsy+anP~.B's! 1e41 iaedw! wn,p a41 >a aan n 8muyanpe p sl»ya saa ays vmeaw '1 WawaUe v»4on 9 We tl w WNUap a4 4>!yro'+1>nPO,d 8mp •xl p sa!m >yl uo amsqsanpe p pWw! ayl p.Pnls I[061) suaqoy AUn!dwr Uaqie "uwvv!I8u!sllunpe ayl u!+¢rWe ol u4qoW wo ueynw!s ayl P ro YN >411o aw !Vl'w!lywm q41 wo+l uxwP>9 %rrw suasnl>no> Ivsnn ou 1e41 uewv,ay In9 Tryas Wa 8u!s!uanpe umlolrynA-+sal uvrosaq Yyeom,lyvN yue!sasasvayls+>IlaswqpsryaaylayU,H'qes alel We 8u!qua.pe uoilny4rrbvd wamlaq uo4%v ou cax va41 .nNw wq p mP vp wy4n sM ylaa pas Nu P!p pryro slan^u ua41 ua.pe uopn!!qrWwd vow par.pv, wall>s ua4 uoyy au!siya.pe e>yyrWvrl lo wnowe r{I ol qlelv Heu^4s aynb a,a.n 4obala nyaclsaq. a41 oNr 4 a;ew Nu pP 4>rym slanou lo saln' arll YAtbi ryl u! qannu ry ryrs ap uo 8wuya..pu uorlcv!ym1.ISW !xre wd p ~>eduu>ysw. >a 1. 4dvo>NRuWwa +nl w,>,e, a.e.wraaw, >.Pel e,sw: rna wsale.rwrwixuw~uiFUw!ulaianuyap.w~prrnrylwrofil'e(roM1ll ~uaP~ pw u.w8'au!uluepe asws NawuWaVawp u(pnu e ul !losun!s>uy Hdwn 4Nq lou aran pnW+d ayl4u,x. luawlueyauwrD We d!ywunu a,pe> Is41 paNa>a>d ne awaqna snq'a.oqa wo ays u 4++'>aden ssal M.q e sw. ynsa, vy~ w,Nrrm voav n!tle> nd w!pu lo nqwnu a4t We eies wrpap aa ad ayl oaamlaq uoneraove a.ua8w e Wnol aH v8mdwo 8ursr upe apw ;+o ep v w 8wwivp v>.n Wn xoya ynpwd a pwuueea ue.noJU•ala!uarawa ayl u/ wa41 u».nlaq uu4alv lecne>ou sen va411e4+ pue awmul n!da »d m HBuwls NWaJaD al4n>en 4N9 +W qs>4r ~odFy vrlewaya mwnqo ayl peNN+ s!tllew yy u! 8ury+ou up'uor+ vwwd auuns e purrol aH Tauwnw lo+aqwnu a8>el e sw+>e uwlqnvra Iwd We p n nJ m nn8a, w,na4;~ wassa4 d!ysw!lala+>41 Pwrwwa'uod 8muan3 <eWnsvg a4r m wop aee 8mvw..pe ppanayJ ww LZ61 ur Ie4+8ula+as4o Y9C611 uemoJ 'NUOG+va ~!u8!spswoNv snpw sellam o!44>a pay rua 1 8un vDe >041 Na~ynym w J ue41 s a8eluw+ w xa! ponyns u yany>npe, w 4>r4m awyl-sa -eeew r; pun,lnnpe nnau y»y. m>g ueyl s>u4aap oles aaelwvw av8 Nxoys 8ms!uvW aw,va8ew aay+ Iw rp!4ro sw+U'uwssw+ ZL-0261 a41 8uunp le41 Wuwqo (LZ61) apeA 'Pws H,na ue ul sW uq +o sw+J lenpupur [4 paawuaEva spue P ryl u anWpswlla>ylv olslJwa elear 9upuads lela+p veys s14+snpw 1e41 cn41 Pue F+ISnpuf uvp uWlrw ayl ml Wewapv4 wlle Ilam Warw+awnsuo> euo euAurrlwr 8w44>.Pe BmDe.uNrw>,p Nnowa ayl ssa;>ew>elmiueJ m4lrmve4cp;+ewWeaurv anpepve4suaawlaquwlelveaqFew auyl s Isn/ vu ssv8v ayl ol .wquNOa %nom aanpo,tl vnn/syns aala p 8u!sD+vpe lelq +0 8u!s!paeW leuoneu leros P'ws or >pew ax. sWrwue ou !ym ,avp wu v y'tl upuaJde au :>auuew F+nlay es.fryrN w!W>dva8ws!InnpepwlleWP>41pa1We4 valPws ayl p woN 4 Vsuonelv palewma ayl p Flqrqels ryl Innqe .apu^m Isnw wo va41 wna Wtl Inlss'»ws !le le sem yBneM pue an^i,aN 6q wo ayr .(luo'puewaP <,ISnPry lo svpnls as>4r lo Ue 10 oe^, ayl w:,e> lo .a41 nqsum Nu prp vl>d wws r>aJSns .em 4^sv u41 nry ne p a.w wr e ea4Na!. w o1 Nlew m anw >ylv> anpwal!4uw y>4rWSales 41 u ~ Pe P naaU>uayl {awwese f41[611 vl
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ci~N n <. lhry x as Fen ral sv Irdh onJit,.~slMl sIFOlJlor~balr«slrucmrtifali„carmark<~sharc makl is aprvnpria~c. Assume 1- are N fums w bra„ds m sM market aM drop s1u ~imc sdDa fw convrnrtr,x. Thm hy an admissibk X'. w~ mcan an Nal mmposel ot a uI d X! in ural mdtt tMt wuW be abmrved n tM model bei„g consideM. 8y N. we mmsn Ihe N:I vrctor whorc h ekmrnl e b!. We In u be Ih N x I unX.enor, m the snlemam sMs X' ia mm-connnined m<am tMt u%' a s a mnannt fm v0 admusi. bkX'. sapPme sFal ft am d the marka sbara preditlad M(aZl) is nily mr an admisabk ea: summing (aXq woa thc N rmn m branda IFen y',elda I=Eq+EN'X'. (a.vl -ly if la il I hdds kr au zdmisslbk Ama cad, N'X' mau be aorv sum fm all admusibk X'- Wc ran now Orore ihrora..a.l. ifrarmme/sheumeNlinnrlYiMapeMmn(Llladmi% ribk X'such IMt,i X' m z ard if Ihc som dtFe merka sMra p,didM by (<e anip for all admissibk X', o,e ard only one dthe kllowing (a)d=0. (bl d s o and X' is.vmsmska:,M Prenf: W ithan loss dgenttalisY, M tha firrt hYpolhm's dthc tluvrem applY forj-L Thm tbe mmM hypotha'n implis that b"X' e mnsunt ar vtl admissibk X'. La X~,....X,'. bca xt dadmiuibk LI X' vxsma witb sum a Defrc d~=X~ -Xx. The(N-II d, art u, m sFe N x(N-1) ru D whou co/umna are shc d, M1m rad (N-I11M1C ss'cN-known IFeorcm tMt the dimension d thc mrv kemN d anY matrh pius in . ranksavahsMnumbcdrowsdlhsrnatrklMnimplirsthnthesd of a0 V such tbal V'D=D hv dimension one Sins u D=D bY mn n..,M Ihe mw,d hYposhes's d the thmran implis b"D=Q b' ust eqval D'a. where fl' h anY s®lar, mF« b' d ths fo,m, il b easy to slmw IMt (b/ is cros.rinmt wiu ft hypwMs d sF< throrcm. Now mppoz tFU mme admiaibk X' i all A X•, wfi sluw u X' < r e a TMmcoM hypolhas's d ft thcorem lmolis b"(X; - X•) a 0 5fnos b' man nqval Bsw K must Fe.e /Pa1x~-x•I = rrts-q . 14 wmch reQahn n' _,1 rMn h' MdM m~e~~on„roa:~~,»tam~bcnHnro~•~mD~krmma ~al.r p, For all pramicel pmposes, shmrem a 1 impke s1+1 vanabks ,MI ninM cannm cmu cqvalbn d thr form d(a2o4 ~swhal m cyvation in ving oaly su snmd ruWa must look likc A shc sum d IFe markk sMrm bo~o always ryua/ unitY. Thao.m, ~:. sappom r« esd, i tl'ac arc N u.dmisibk x' sucF ~MI u'X' = s'. Then Ihe svm d she markct abara m<dind bY Id~D/ wdl cpual unitY for a9adm/nibk mu (Mid nn1Y f p) X/ is mmconsveir,ed, tor) = L.... K. Ib) N a R'a.0' a sabr, rorj = I.....K. (q Ea,=I-EF':'. proof, SuRxknry follows by rvbsulution into (131A TM ergumms used to prou theoran 1.1 alabllrha thc r,msasitY dh) aM Ib) Givm (a) aM (bA tbe rccassNy dkl foliowx Ay subslitution into (4EIF Seaton 119'M) invntigala v aambn d non-Iinnr marka aMre modch shn ako~fail to mnvtram tM sum d the pscJincA marktt aMra m yvai unitY. Flis f>rdcrrad eqaasun k log[I - MSds)j < a, + b, bg[I - MSAr - II) (C.ti) Here M5, e Ihe M breM's (m product's) sM1arc d tmal prodrnt (m produel ekxlsalec A/ n edvtttisir,g d the Ilh h.a,d Im prodva/ in the (th medivm, ard Z; 's a variebk desigmd lo opurt tFC ertans of U,e iN bnM's (or praduct's) avenge Pske « uvmge dnr pri«. 1M a Rimi naasmry mnAminl whki,'s nN impoxQ's tMl rM mm d os,e minus Ihe anti.bga d the dcpcndnu verkbls m 1<1l/ be mc Snton premnts enimata d Ihu mudd using eonsomrr pen<I daU on alrs d e bra,q, she correspondi~ praducL aN tM oprr<pmnding producls chm Ilamg A viceks d dalv. nuM d 1. 1 ase signifnnlly d"?errnr from xro. iis ctimata a numba d othv MaM shsrt zM pmtv<I aham mndett boeh fmmr m,d log-li~ uM an unconsvamed. 6t90 SS6i5
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d kuv. A mahiD wlYSS rriN v Jaia fro 1950.t5 ne EEres .nAN o ry+++kJ. aml^ile deM^d<nr variahk was pcr capita mnsurmpr:m Md<nucc. Thcrc werc nadvc indeMndrn riabls ru.umc ¢am)av<mgc emMran e$evm addirio inacpcrNCn rubia crt used munrcawrc diRmr<m pM1asa a sAe overall markeling eROn carriM m br ~cnutt, I++c. an w a knv¢ sNFDCS N Sarre; GXbrnu. No LBged variabls wlwe empbyM As Ne tP/. lev<k prire a^d umpcrmurc had signifrtm rregarirt drttlz++'I+ik o^ly ^ne of Ibe markerirynrinbks.an Mdeadnewspaper<ooperalion.hadsignif m posirivc ipacSl. SiasY~si* TM1Cj orsm d Ihe v ar s d nc~ d<pcrWm iabk wa eaplain<d. Inl eRna Mrbe seven markeliry v<iabks as v8^if m ar nc~ 5% kvcl, bm tM imprccision d nc~ cocRc'xnl madc i impoaJbk t ray m rc lbnn this. esr~rbvc a,M Warrgh /t9611 canied ovs n very interesline aM ordvl smdY of,M1C advenhing d oranges T1xY pres<n,aa sbe folbwin6 <sti- re d rh< demaM Nnerion Rteal t^ erop ><ars 190]CB Ibravgh 19GO-41 nM 19464] through 1958-59: , _ -2.9E9 - 390 Q + 92E Y, +.2J1 A, +.lOl a, (4.25) ~19g1 /1911 (-125) (.0151 -1.9] 48< 1.9F 229 Ra - ]2 rwbk V, e rM 1^garirbm a rhe pn upiu famr velve d onnge saksvdellatcd bY lhc cansvnrcr pri¢ iMa m Yeaz t Tbe iMCpcMml ariabks Q. Y, artl A, arc 1^garilbms a Ibs followin8 pva^Jtin: p<r capiu markelings of onnga ur boas've yeu r. ps apiu dksyosabk rrc of comomcrs dcRat<d bY nc~ wsumc pis mda m Ymr r, arM p<r npiu aavmrisin8 <aDCrrA4va by SrnkiA Growas and rb< Fiorida Cilrru Commisainn (prod,rcv mopumivs which aacovnl for Ihe bvik of marktlings) della/ed by tbe consunxr Dris ird<a. Th< Isa erubk rhe bgaririrm d rhe avcrage d dakrod per wpiu advenisirrg npcnditurts fm the tm y<ara praed'm8 rur e. All ~~ nls d tlre iMCy<rbem variabRS art sig^if'i®^t et rhe S/ kve1. cxNOlic tbal anly advmrising hu tlynamk Mats an dcmaM. Tbc nmims Aau thas theY attcmptM to us s Koyck lag, bm lhnl the rsvlu w<rc touh unvlisfadory. Thc shnrl.rv^ advcrlisla8 claHidlY ademard'n ®siry xm ro be .1] nrd nc~ lon8-run elaIIidIY .N. NerWve aM WavRh frt Ihu <pssaGon w Ilc wbpc<ieds 19U9-J6 aad x fe.1 M rAe.e,miY ile c,xRicerv. ,+f Y, md A,.rt.ignF whik m rM1c scvn+xl ruMri,d++nlY Y, M1.+. a.iRnR~cnm cncRxkm. irikmR Jirt.re v rd tM1C rw n rh< nbilirY +f rM+.c n.A'rp, aml .uggc.rcir ^alYSis of uvYJlxv.w/l,. rrM1epnacl rYdsir vralelrange, cwTay nr 1196g/ a marcJ fbe cocRicimis M s+be fMiowri^g modcls fm IcnrY'r^^auR^rndmnamprion vaidauforlW4F4ao Q.= +ArY,.++ +Fa/+~-+ 142N) Q-^+A,Q,~r+AzAA,+A,A, 14266) Q+~a+A+4.-r+A,Y,-r+F,A, 141fiq Qwn+A,Y,_r+b„i,+b,p, M2fia1 tnQ,=n+A,InY,-r+A,ln4+b,lnp, /42&j M1edepndrnr riabk.Q,.waspercapiucomumtxianinlheukgorY in ques,ion m v1958 ddbrs TM1C irrwmc variabk Y ukm es mel pcr raqu c^nsumprion i^ 195g dullar; ard P,~wasscirhs rbc mplici, deRarm for rM1C car<gory I^ 9nssion m rlx pregorY's delL- or drvNCd br rbc implicir ddlator for tnut conwmpion. r Advertis/ng Rgures werc oMeinsl by addirrg mdunry taak hom rM1e Inurnal Revenuc Service govra B^ak a Slasisris d Incomc tm iMnAris wh'ab wert bgiraly associasW wirb u<h cau8ory d wn- mmpion (fbe year 1952 wa ulims<d by 6rrcef i^urp^ksion) T1w advcrrnmg wriabk A„ was thm rnicvlalnd bY atllarirrg tb< utimal<d aonar ovnrys kr aach proaw cka bY IAe imWku aAmor rm 8rnss rorrai product Thc ,vubk .i, appnrin8 n moarh 1426d) ud (4.2&) waa a rhrcoyear moviry average d A,. Aduttrising mrnovslY, espr¢ad'm ps ®piu term; even IMUgh <onmmpti^n aM r 4nh ^md<kr 14.2sd/ ard 142F<) <v<r proa+wil n xl a semm- ca<rt<km arim.rs wnh mc corren s;gna wtrm ma mi,a km, wna droppna, bmlr mnach wmkna for Mrn i Cluthing ard Orv8 Prc- rov. Modd (42bd/ wiN nc~ prwe urm warked for tirfirc Travd ard b^Ih maa<6 wirh p<i¢ Ittms wwkM far Weltt. thnz art unimpress/vc n+na <.~cermM kmMMr.nv Mw e„ry~ ~ KK~k,~~ 56L5
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iusl incrtax m markE :ba.c ron- by a ainay decLm. ttTik Ihe m.w aquillbriu.xlue d AS wonN bc ebo.<the oM ryuilf- bdum,,be compo,aC nwn Isg e ne&ati,e aM,hu. dn~ly mnnmgkn AccorAing _he OtSQ ertimales. a mzinumd inan¢ n AS xouk again lud ... i'wu ria; m MS fotlo+ad by anuLy hll. il<rc. 9b90 >56t5
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-------------- --------- -- - ---------- ------ ~ .grMMwJy~ula. folumn i o1laM1le 511 F ws rhe mrin d IRS m AJv<naMg Ag< umher.. la s11 Yeaes esttN 19 anJ 1VR~, puFliaFal Rgures an .~p<oJlru rcMldcimaJurmrdl.w labk. wR Age lrgur +~Id F< diaorsd by badceslunatn nf crpen eim n rM1<a :mad mmia. m<eia ~h.r ro pursuc tM1is rn< of r<ared g kt ur rre iF< surdinln<rcan r'~< .An%irraicamalpsrbrrbrdhEEUrru forr IM1, ndi<nIM mMium uere rrol arailabk b Adveesising Age: Mcdia Y<er SpmRadio N<swarkRedio SpolTAevision Orrldoor 1955 % % 96 % X 195t X 1958 X 9S9 X 191 X % 1961 X X 196] X X 1965 X ~ X rhe irrcroa In ft Adr<rtieLg Ag<rgura rtl.sive b nM IRS numbcra from 1963 lo s9N maf M1a yvrsinlly attovMed for by rbcirr<lusion dspot arN ndwork radio m the meaaured md'ss fm 196f. but nabing herc amurru forshc 1.51% brut Alm nolia llul sFeirrdusien of spos xkvision in 1956ard spot radio us t951®used rq rcsl mo.enrcns insLe adversbing nsio.R rosc sAghslY ir 1956aM fe0 sllgbtlY hr 195> N<ishcr the rystemmk riu dumg 1959-61 na she ahadY faR frmn 1961-63 nn bc nplain<d by diRtt<ncs m messurM m<Jia. The pemikl movemaNS d th saks arM adv<rsising raf suggW 9shn auscs. Thc folb..ing svbk shosn shal snmiag ponn ur rh<adr<.. sin4 mlios w<r< <ilhv coirrcNent wisls or bd by a Y<u IM1esuming poinlsmth<aksntio. 9E90
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niv.. dgarHk, arc nnm m< innw~ ;n ,n aw m r.m..- nr n aJurr eaam3 MnF v,Nns mmiMli~ prv, FYSIM ex ~ ng fum nz ,v wM1irh aJv< zing u h.rri ,raefK~J<i e<yon zuMi;pdm<pa ,x nmrM byallYcn <nnHruns. TnisnsleF;liiY can h smdl<d b<st dirallY, :Arnogh limc-a<rks analrsis sucn as wc znali p<rbrm h<r<. nz kr stvayin8 QBarttx adv<nivrg First, ,Aia indus~ry xas bemrsivdM oflrn, w our work wn be rnmpared x Ina~ nr mh« mnors sucn m win prn ling a nr bo mHnoa a,M mxbs~ ns n zew,M, relnlm res<wn n snat m €w,:l dau «;n br In's mduz4r S~ thc malm f,rmz art lar8<advnr. z tn<ir<xMnzes nava Mm uFubk:l aM publisned. Major aiv<nif,- a fairly long period wnen tne mapr cigarezklyma v<ly mak<rt or <igarHrn TM1is mak« il nusiersmwinkgante mvaraurudau souren with ~onfide:rc<. Finally, mert <xin fairly rtliabk gur« an ztr numb« of cgar<tta mIJ by inaividual frrma Wc wn ux IFC number dug.rcttes nP vl« whhw:s xaving to wmry abovl the canlrve4on d frm~ rcar priaindirnloam.maonar:ala n tn< Ma <mo,«. w< prcmm ana air<ns «timat« d rnr <rt«v IXcigaeHk advenidng Th's ehapl« s mmemea w;ln ulting tns nage n In rn< ne we ey- aittus tM helory aM <xam;n« ax« of ~Ise eigar<tk iMUZ 5«lion 5.3 «I~igat onsl d cigarHk aav<HS;ng In uc m 54 w< M<s<m th< Jau sourns antl noktian <mpbyel m tlc n WY. The adv«li.an8 z<ri« only tn< p<riod I935-196i, erd w< pobs am mmc dilfi- culli<s wilx atn<r dah whieh eov« mort Years. Tn< final seqi<n d ,Ais cnapkr pr<ums tne «rimalim melFOd uud in empl lo cncumvem IM smmlunrous<9uations probkm dix~svcd inatxqion 42 SI T1,<Cigmne<InduurY umb<r of avsn<rs M1ar<wriltm on Inc hinory d Ihc VS cigarnrc iMUxtry, w our Irtalm<m h«<wn b<bficf.' In M, 191 L tx<SUyr<m< r.m ' .•w mna..... no.er„ n«z rm vm w Ixr. c'o„ri n<a mn-lan:,~m rmw a n,,,:n,f„ir n, •a,ia~i„n nnnr sx<r,n:,n o.a<rm a, ai,.,,lmion. Tnr,.:,i,• ana«mr rrm, w<r<nm<d. n'IVFamr.l;BgHiKMyeraR.l.g<Ym,Wz.am11•.I..,r;llanl.ln 411, mkJ (, ,nly n nf u UnikJ Sut ' b 19/l~ RrynvlJZ whicx'haJVrx<ivM 1n Fusin<u lran Ixc Trusl, lavn<nW Cam<1 cigarHkx Thh Frand was pncr:omcnaliy su<crn1v1, aM il was soon;milak:l by nm<rrcan i Lua.ky Aeike Mmd arM LiggHl & Myva Cxeakrfi<Id fly 1925 Ilxa tM« haMS <on.nitvtM St% of damnik cigarHk praJnnian.' In Inc Mri<d 19113x per opik wnxummion d eigarns« morc Ihan yuaarupkds cmrdm8 to Nirlwik 11951, p. 5'/A Mk< cmnpHilian wilhin tn< ogarHk iMustry mdnl in nugus4 1123, nfler Ihs time, Wv<rlising ncwm</n<main <omMtilirc wnpon. In urly 1931, prwc wu usM for twn ve purpoxs, 6m il was usni br ali In<w<eesmr orm tngHher nidi w<rttinY f~bramn 91 IMTI'q ~MOrns end<Hro R Willumson,w n grnl gains in Inc 19J1-1919 pttiod aM r<main mejw prodaars to rh'n day. gy txe md d Ine txirties, lhus Ixert wert su maj« <igarHk mak<rs wiln a f<w vcry minor 5rms: txu wrucsurt xn mxmu<d to Ile p.«rnt. In I945, tne tnrs kading f (Am<riwn R<ynoMa a,M Liggcs 8 MY<rzl w<rt rouM gvily dcovpirary to r«srain sfad<aM to mono. poliae tne cigar<Ik merRel Fin« w<rc impoma fa th<oden.a d<on spkary via tonxiovs parahlism, bvl tn<gov<mmc:u hu not sovght civa mm<:fiLS Tnur mh wrc n« n,a no rnl imr+H on m< HmHm< dlheindusley. In tn<p«Iwar periad.IM,e.rcrt a numbu dtl,an8« in tM dgarnt< mark<I. Th< firsl wss In< ris d mw tYp« d<igarcttna ln txc 19NYz boln m<nsholet<d arM kine~aei rigarntn wcrt ort<rcd nx nk. a,M Inc fnt fitcrei cigar«I« mlcr<a Ihc merkH m 19/5' Bnt non-rcguhrvud cigmtt« d"d :sa s<tl m su6uasid 9na:,utis unil aM Ih< 8<wM World Warr In 1915.96% d tle al« d txc tap s'v firmx wrc.re 9o-.m~set.w.was n.ereM~.C eo.,a.,.~romro.~gerra~<rpi~nmcm :.. ..:w,.a ,.,wee,r.a. LZ90 656TS
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wsne+u.Jix IIIVWWw.W o1va1»5. ` Si954 0636 Wdxa qnw. a•. que4 =yw ay1 uo soo!letsen rieMOdw! ve auyl /i io>nsww a>aa Ivyl epw P ps ay141!n 4ee wu plnom eums+aspe pwl P aseys punsnw nays vo!ysel awv ay1 u! npaw 1!e 8uowe na9PM ?a41 Wpu!p muJ Ye 11 P>+nsam s<vmis are npaw wud a4t trys aw m!al 'g ym> punse>wun qWw >w^s 4u!ney a~wvl!!P Wnw may ysz ota, oalsanb vyt yaroulJa o1.Gw uylouy vuNw! v vpaw pvnsmuun ays +eys 6'S >14es lo s!seq ayl uo aPn!auaa o aM suug relro!ueJ +q m tmW~ +e!n>,ueJ +ol va..fa41 weuodw! xoy woqe 8wywu m q!N s!ys wg a8u>ee m weyoJw! nl!peaJv pvwn a4s ryyn nys os 8mp.ov T9i561 pouad Ws sy vpaw punsnwun R4 +oJ Wwnwae se.n 8wslyt JnV~we~IWn.1 , v.> pvW 6.W v~ awPU>d uw a8wanw wPaw u! ao!seuen n41 cw&J aw4s wal+e;> swax sl U! T>lyn w uxoys wv wonaWwoa xays P nlnsu ayl n+eys pvnseru ap!ssod wwm,w,w µe wnuu.ew ay> pap.w+J pxn wa>8aJ >4y 9ulpu>JS W+nsow ~o vaye x,w+l ay~ uo a.e4 Plno.a apaw wvalPp a+nsvw~ os 8wPe1 Inya le4m au ol /e!P>w w!W apnlw! yx4m P ilel npaw uayl a vvpaw w ays o ewpuaJs P ueys w+y~p~>w!rol~n wlwsala!Jwmveyamy>lym .+eMVV 11 IIp+4xa+ a1leseio>.*+ 'Illeu ~e!mlwolwl w+y awos +y saleys pvn eaw lua+>ll!p i b 4t!m Wna >v al q mPaw !a+nseaw p sias 1 all~p ~e41 w.pe puoneu P AewoaaJ teym wws.ys y5 ai9u1'+asww pys wo>o WwW q ~ b Ixw a4s ~.> W awuaL!D aa4~ ~ wn!p waslN 8wpuaJS +!>4s F~urya auag le u 141 F'+e Fpewwp! <4ew, sw8pn9 so!snn.pe ua4s wool!e s'ul>y ile p!C+eM ou u! /vl se4i apn!>um +eypeos ms P sus 4wq lo sslns 4+ 8w;e1 pavol unf suuJ >w41 >4s se .(Ile!sswp ve wu y8nov~'awu u.o oolle la9Pn9 +~a41 Wi+en a+wW Jy!4J Pve uatW 3` iw95~1 i, aaJJe aye 1! -a a1iN 8wpual 41 Da3ueya t!nw pp M YumwFi Pnv'W~'IDxol d'>Plou6ay ~e41 s>w>~pv~ 8'S>!4e1 / su m~, yl!m wawuaJVa w a14!srW lou n p'aWwe.. ayl ln saayt u'a.aw! ~>wn e~e wo a!Jwn ayl wo+l P>JJU+p a+e 11" +s>~
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Tbxnc .am~Fen~areeum abkava whm mx uDeMm riank rerxr, mxa~ m aaM x ¢. TFr defrcnden aM1k i.a r M IFC Sa wFen 5,/r1 is IM1CM1Sharc M IM1c ilh frm'slsp<Ming dcwlM ~o iM1cjtF medium in yw r. Final/y, a,~el ' ms11y-0islnbMM aror nrm TM modcl az i1 surMs ays thn all axms in an rcaa han maxnualh Ik sa~« :pxnding pan«o> wc wm rsl fil (5.)1 w dala far or Ymr ar a fime aM namirc Ihe propasition m(or mcF ycar IM1e b~ art rhe samc f« sll fmn we IM1m aamiie ft frms orc by orc lo uc if thry abmei thcv speMing patnrnx ovcr 1i Fwsuch ymr, we form a vabr M kngN J6 wlwe,kmmu art tFe S~y wctM1m employ Ibs ml« as IM1Cdcpcndxm wrubk in a rcgr«sion rhtM1esuindepeMmt arlxbkaueJeD~F«insrcnttlheGnl wmn, rM1 mnln n«nm. rw mrr,nb and minr-em a n IM m'wr ft dryeMem.ari,bk an rhe ah.B M rhe prinl msdre m Ihe budgels ol rnch d IM1e s6 6rm.c The c«rcponding dummY n Ihett 1«ations aM xer«NaeaM1erc. M1ellrms unarhen bx droppcd o~e at e lime, from tbe umpk. An FdeslanbeemployedloueLlFesurodspuaredemws'saignif nllr rNu~ by IM1e omission oreaA rmm V the GI imqoves.auhslamially, .wc nn IM1x r in.oiwe dos n« haw mx sv« ond«hmg n ge MMgd allao/lonv as rFe «FV comw,ks Tabk 5.~ dws rM1earesulls of aDplYir~g Ihk nst In 1966 aM 196), il s cksr th.r Ameri~ a apmding Dalnms d/Wn.t signif «IY Imm Iboa d Ihc «h« 5rms. In 196C. DLilip Morru erd 8rown & wilfummn rcem u M1aae atloxsfd fFeir bodgcnelRermtlr from ft «h«a. wc muk alm ha.x performet lan to m vhal heppoed wFrn fimn exduded from IFC ampk n grovDS d Iwo eod e.m groaps d rhree Thc hrD«M1ai, wen nn .mua Um be vbeb)c Ne exdued gS budgel xhars eilfnM rrpn rhosafM1e «FV hrm: BN if mms bterouVh rha :um an exerciz.oaw onh u,q<ramre /he w«Juaiw, ma nows rrnm ubk 5.2 mar In eed re+c o« « m«e fimu apcm mek aarmking hudgd: enb6amiaiy diR nmh Inan Ihe othcrs Tabk 5.8 exhibps rFe ivulu d,imit« f«udeayned n sFOr whnhv a gi.en frrmi all«ation nnuimd mnnmi nv mn. Thx original depxMml wr'ubk fin eadi fiim Im IB ekmrnr; rhea bei~ IM1e sMa M IM1e six mNa m eadi d rhe Wa Ymrt To perfoim Ils Ss CTa IIwM.~a fn.b InAb1 fm mavawm d~le x+mqbree. z.n..«,eramem., , .m.wrFOMw~~>.abnnm,a r SgNfwam ai H!,/.Mb>r.FY.IX.~ b Jepm o! trtMmm. 5{drw,m n Ip/./abme Yo5/. S~ m 5•.LLo.e(R/. an S~,mfum.l 1'/.PtioreeAt/ S£90 bS6I5
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e Fnv< sM chapl<r E IM1rI i ¢ rM ma nze gcA a ofuksfw «.pat 1 :ainR iz ~umN in 'zydemamf .vlun s. Mofu f~advcr kz. H<ntt i~~rdaisionsWnc wi1M1 IM assvmd (arm dvlhc dcmaM rclalion aM ratonal CcM1avior~TM fam o( fM1S funnion waa vbviomly chozcn lo me4e nc~ syNCm livcar in Ibc SoRArilhmz. In ~he modtl dcttribed abovc, norw af Ihe cocRximb vf adwnking in I M1e dcmaM rdmiom werz idem ifrcq vinm m predN.rmioad va riabka rc prex 1 eucwM1 u IM1e zy m Raa mamd IM reducea form ormhmodaandcamin<tlhMMictiwpower wcllurisw bililY of IFe eeduced fomr wciluirnts wifh xnam p ri lim~u w~ tM1c ml parameten. st Thev:zexl ertort aivne nc~s Imc; e zzudy by gau nzM Farwns (1969/ W a producr bclonging w the genva/ daa ef rrcqvent% pumhsmd ModvcuzaN Mcdominanzly m supqmvkc4 wu morc aucrosfuA Thn mvdel was eaprezttd m tcrrm d om bmd d inmral RN-; aM Ihe RcmaiMm, ddmcd u all qM alnblizhd branda Ncw hrands. on J:e mark<z ks fM1an om: ym; wcrt zrmtW n uogmooa per ®Pn nlm nf RN3 aM IAe Rcmaudrz wert ponWnad lo be lo8-lincar fumtiom rcnl advenning of RH.z dthe RevuuMe;aM dthc new braM; wdl as cvrrem wlu arzhe new IrraMZ aM hggaa salu d RH-i azx3 tM1e R<mainaer. Pm capiu advenisiy eapendiWra far RH-2 erq fhc Rcmainder wae med< log-linwr (undiom d bgged wlu aM IaggM edvenlairg m bMh wtegorlec AO .nructural paramners in th's model re idm~ifird by vinuc of tle kg8d mdogmom varuAlec The reAUCd ronn Mvarianz w<m Mimated uv~ 96 bi-momhy obserw~ m, eM Rr1 ren8~ kom .1E3 m.9g3. Th rmvRing synw d fineu diRama eyvations waa s46k and gmcrawd reaeonebk prcACtazv xowcvc;wM1mmeNmctumlaf fadghciNN.iamrdeaaemaM fw~ctio.ne wam a,mmea, omy one aawl6ivg vui.bie ma e mAfirimr 6rger man fu NuMera crr«:'v~ fba eqaarien aapMlniq uW d fM g.m.inarn. Ilw o«.Ir km d.dwuivg d ua Rmwvdrn w.a moa mav rwicc iu N.va.m rnmr. 4n Ihc mnN «¢m wprs m Ihh aeria Faraom and Bes (/959) nc rlu same merktt T.o bnndt RH3 avd SL-5 am arudiea. Fm csah d fhcu, e foweqvafian bg-linwr moda/ b prezmzrod.hidl inadmnvd.vd Wvenisivgavazfoneqmrvmr«4hebnvAVOda nWy and Im the Rmnivda. iv Mh ®vn specC tbm aw Nmtid w. diccuvud rm x Nrc r:ew bnnd 1- zt I l Yiclds IM1rtt Wve <nR m e0icic l ~he: e e Ih.annANv Irvrd err.c ()nly Ile ~wRickm N ihc ad.c K xnd 5L6rin lbe c m W, zu d IM1e « aiRnif n Inlc nglY. all cM(ck u dadw sing uc~1pozilivc.nin fact J N o bc bdicvN, dovhling IM advc sng of zM1e Rmaina, wovMlncrm.cselmofSLdbyC82% whercazdovblinglbcadvmizi~: of 5Lfi wovld add only 22,1 % m Navl¢ IX zhe fhra simolumouscqvatio:u modch cramined, IM1en only 11 kN oMaineA zignih®miy pvziliw ufimafc d thc impea d adve uin8 on sakx And evm Ihrn IM1C nvgniludm d zhe coeif ienu wcspttl. TLS raiay eahavzliw survey d rh likraturt hu nd predvad : imprutl.c tisl d pmiliw revln MoA aingbcQVapon moaeb 4i4 cahibil si8nifum posizim advenising coc cienq in zpi4 0l t: tikrlihoaa tM1a Ihu cocRCicnu wcrc biawa opwardv The si moach dixuszed abow wcu nm much mo2 eml slly utsfac'lory A vuiny d(uxuonil lormz M1avc bttn cmpiq~ bul non<performcd conzMenNY wql. Qb U'.ttabmed fag Mrchanisnz Ths idm 4hu Je drae a(advcrtnh:g peuiq ovc ume's bY m mn~ owL In hrs diuvaivn d fhe mMCpt Snfram (1955) ~IC rdercm u long ego es 19)1.az 9UIiN1d Nzamis m wlidan a ~avA merAeniarm em rurwyed yy Tup (1965\ elo:q wilh 1 zssc alWiec He givda Mat Yhe eviacna..., whik 4naing m avpp thc belief fMl szM an Men c.iN; e pcuveslw M iwl tmc4nziw 1n thu brkf zenioq w<amphsia primerily rbe fom~ d.nd nVan !or wrbua 1.9 mahanism; ra1M tlun cmpbiW cvkeno: d tl e.iMany d sbv xonam<uk Nudic aiscvawd vr fbc bN Lq ctiemylnyoE a lagg.d AcMaAem wri.bk m Ilsb rc8rwaion e9.fl. Thb i; dmurzc epviwkM zo avuminga alNr;bukd lag drhe go m grnmco-ic rya a' fv aacM1 e ao-„evrc vol ovy aawrlning dN n<roHnWrrf . sw rc,..+.ro ..w n+x <h n 1„h<ro:,:i,.a...w,,a: n,aw,„.n in 6290 b56:5
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S- = 3
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1959 0652
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m,tw J.a .,:r~aw b.nn:nnx, av,nkd a.n,la.rr.,n mdone M1Y ~he nigh corrdali„n Ix.lwern ,FC aJnr,izing M,M ,wo dans. Henjamin aml Mai~nM I I95tllanatyxd fam dlkttm mwklz of mic. v.pnntt aJr< zing Jau from fire JiRnenl advsn g rampaigns~TheMslep mnwasuflMform oar4 a.nlnA. I<.211 wMrc Q is aais rcsponu in u:n d producu, aM A n ad.<nivng ppmeimre.AS wc disn:ssra in acdim, a.D. aAnv< IM aumda w<rz IM lo tnis ulalion by annlogy wilA sM W<h<r-P¢hnn'laa' dpsycno- :a. Unrorlumnly./<.3]I dN nM provid< an acc<Mabk fil lo IM aa .5„ n w<x known mgl<.pvrm study d d<mad r« a rrms odpm a+ peAnrmcd Ar PaWa (196d/ aM wu diuuxud in wm< dnail in rcgrasion <mplpying lagg<d uln Ihe Inganthm d dollar sing<xpcMi~o mcdispasableinc mcardadum riabk e•plained9<%orsMra medLydePmkhams alaor<rthe pniod 1906-19bQ All eodriienu w<rc siBnif r aM d Nc npeuel sipn Dalrympk 119661 rcponed an analYa's M IM uks ol dmhirg ilmu in d<panmenl smnx H< <onsidcM Ih sala adrcnizin& Wke e,d arkopdSiindividaalil lingua arkd Tnc uason was shon movgA In ~ advtttism& mmwrW by Ihe sia< M nnvspsrer ad; wax un4kdy m lurc hm iMNmxA by anual sala though of moru anlicipare] mks probably aRMed adnnisir,g. In any . edvdlising dd nd emm signifwndY imo regrasians Ihst p- plained saka. Inar:xempapcr,Lambm119691examin<drA<demaMroraruyuemry porclusd food prcdun sdd in Bdgium TM1e f wnaNUM wx dominam in IM markd ror Ihis pradud, m Lsmbm rdl rra m wgkd th<advanis/ng er<ompniwn Ovp a twmly-Year pcriad, an cyuation invdring dispoubk in<omc Iagged min aM advanning aP in pn opi4 n s, aM pin611 aM tletribution pplsim/ 914% d IM in ptt upiu ssks The bgariNm d per opira adrerlLsing ~s ns<d. AR eodf 1<nu w<r< signif nt aM Fad IAC expend sgns. In many waya Ih's sludy rcumbld IAe orc by Palds di-sad abon. I J M M1ran~'nlMnc.caF,r<I J~nikinA <JMttimaofor I AY a(ail,::e u, x,lrynatcly JuJ wi~n Ilw dfnu „f,M1e ock d<ca Idx mlu mllY,,, k In nYN~M romHneer:mJrcyy e,I,e:sdvaniu,gMav:nrpel: nsignif ntThiz angclwnm ttalkO~Aai, Woned abave,aPtlp wasunankrln show s signifmm <rtM of loul iMOSIry edvcnixing on mml i,:daslry saka in IA<z irMUflrip. Ir Ih< adv<nisi.g d any od. Rrm in<rnse iu uln only al du ppmu d <onm<rilos aM ,rol at IM <xpcmc d mMr imJualriq arry ,d+uu ' omynxiveadvMhmgmu9dercautMUlmdlhaGnnmyop1ion. Asuw< dimuu in sMion 6). Ihis auggnu Inal rAe signif ine d rh< wnadv<nisingvariaWeissparious. o Tfieu audi<s d Rrm or Mard aale comai,ud rew compAing raulu 9<rnman wam rcuabk.nW~z unry ror nm.MUecning nnr<la only Pelda, lambin aM P<la fouN signif m impasu ol adrenising on mks,.M only IMx mrae amdie au<mpsd w<suman dinrlbut<d bg mod<LS. Palda aM lambin <mployM tM gcum<rrk ar Koyck lumsu. Ia(an <adusirclY, arN P<ks rouM I661 Ibe uMm< wa. Ihc mo4 g<naanY succeanil duv<ral n<rriM All d Ihe uudies discuurd m rar m the udien han anpbYW ai~kequalion modds K'c ha.c sunud, bWb n shalntt I aM u on a.z. abore, Ihal mrn mna<k am rk<h u rkld beAlY buud a To rA<pkd Ilw adv<nlaing depends posiliv<ry on rnlizW nka w'nAin nd: pttiad, oMinarY kast ttryarvs will wasuiman th< impaa dadv<nising il may alm Ae rAe mu /har the dems,d rysralion ,rol A<ntifid. Nma, it e d mnn than a fntk int<ml le .rn wMl r<sulu hev< b<m ohui~ud using simullaxnm <quallons ucbnpun Unfonmutdy, oni9 me group d r<usrchm laa nk.mpled to <myfoY Narm<thodi ~d rACr mWU lucs nd bemoverwAeMinBtysusnatuL In IM h,e"simuNsnnws <9uasiom studY d sd.enein6s cRea an demaM, Bass U969/ paminad tA<pc ppira uln d ngular a,d (Ik. dgarctnx. He rc6w nks m nd ®kgory lo advennin8 in ntll mngorYpp npiu d"uposabk inmmc aM In< ptia d mmrGXp cgaMln divy~ by the <onsump priu iMc<. Advcrlising m euh o<gary was nlaud u vka in rM wrnspoMi,y nsegory sM advn. r'ning d th< olh<r p,<gory All nruclural <qualwm wen wrillm as Impr runcslom orlk bguirhms M xc varlabin mmsioned;:w Iagg<A variabks wp<employ:tl. EZ9C 6S6i5
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A SfUDV OF US CIGARETTE ADVERTISING: - ESTIMATION RESULTS ot a<maM moa<6 or llc cigar<I s chzo <r a<aiz w ue nn In ssc ron b.L we moL<IS th t nduzlry and for iMividuai Rr <xplain markn shara, wFik shc rrca lwo ucliummnwligarc loui induslry ssla and IM1e saks of <ach frrm. $ettion 6A summarizs vur mam rcwlls aM dnws somc wmlvzions from lhem. 6.1 MmkerSMreMad<U Four basic mvdtlc suBBasd by xmwn 4.4, art invessiBplM et lFis S.I MSXX-MSX%1-iI ° a,DAM + u,DRE + azDLM + a,DPL a,DPM + naDBW + b~AS%% + DaMSXX(-I) + u 5.11 MS%X-MSXXI-1/® o.DA1M + vrDRE + azDLM + a,OP1 asDPM + aaDBW + b,[ASXX- MDXX(-11]+ SIII M5X%-MS%X/-I) = a~DAM + eaDRE + nzOLM + o.DPL + asOPM + a,Dew + NASXX + bsMS%X(- D+ bzAS%XI- D+ u S.IV MS_MS%X(-t) a a~DAM + asDRE + asDLM + a,OPL + a DPM + asOBW + b,[AMX- MS%%(- I l] + br[AS%%(- I )-M SX % 1-D]+u The nouzion axd . bove e dattinm in l.tk s s.a eM ss: a is a srormay dMzbuad, xru0y unrortelat<L arm tam wnF wnslam varunce. As ~M1<.a ~ablo indicsc, mvY.r sFxre IMSI is mersured u a hanim nf svld. A ~d es arYn share ~al in Jou pcrtormcl.hmihcr< iswcrcvcrycloxmlM1Oa aonW Lclow and ar <.cnl<d M1c.c MoJel S i follo .manY a Ihe nudis ci1M m chaPkr 1. In mvdd SI1, x conslrain F equal m F~. Thic in lu s1M1al in <quilibrium a fmm i markcl sharcni, on avca8t qud w iu shar<of clfMire advenitin& Modd 5111 gen<ralixa Ne p8 mvln~tism IhrovRh whicA changa in adv<nisine aB<n markel sharcx TFe co~Milian Ma which wrresponas to IM1<cunvaim Impozd in modtl 5.11 u b~ + bz - b. = p This'u <ary so impx— on !he alimatin6 Wualions, eM il ® impned in modcl S IV.' Th<orcros 4.1 aM 4.2 in mvpn 4d 8iv< lhc R<nmJ wMikmm lhst un 1. al(sfied Fr 4nar m.rka sham moemalFe son..<.r<mvesfi- 8elin8 F<r<31. Prditted markn sM1ara art losum lo vniry identinllY. TFis thwrrn imGlia slzat lhe m<Pw;cnts a models 5.1 - S IV musl sslisfY thc followin6 ralruvions: (S.II a +b:+b.=p SII) n sp (S.IID a +b~+bs+bz=p (S.IV) ~ a a, s+4=p Th<nwdels wa< stimal<d wbj<a b B~ cnnzsraivb Fy subnilutmR br aa rh<ryuivulaN linur wmNnatian a th<Mhv cacR'sknts Thus m«ya.rinnr.aaany mlimal<a w<r<.a rmlawa: S.P MS%%-MSXX(-1)=e,(DAM-DBW)+as(DRE.DRW) + os(DLM.DB W)+ n,(DPLDB W ) + vs1OPM-0BW ) + b.(ASXR-DBW ) +bz[MSXX(-IfDBW]+u 5.11' MSXX-MSXX(-II a a~(DAM-DBW)+a,(DR6DBW) +ns(DLM-DB W )+a,IDPLDBW) +ar(DPM-DRW/+bz[AS%X.MSXX ( mxY [s-mv- r// wem+a a~aY s n.b x rv m,r..P.e, m.4.~ r.)la..a<nr ar~mY ua..<,.r..Mx ~r:~m.mn b ms E1,90 b56L5
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TM1Cr< mlwe ugL~M1 .vhai raging C'baR i:R :M1c y ~1af vk:rc .y a. Fu:- m Ib mn~ex~ uf~hc ~In mRkline m. w Irnn uUenandcyvn n^I _ : i+hFZ F : . /hrodvee advenrcing(un<Im kl5.ln Th< wriabka X aM Z wvc asxumd to he di.nibvlM indepnMml of IM1< Iwo error Icrrnr, u~ ,M ur, ard lle ro~ k surcd Ih~ impact afadvcnisingan sela. We shuwcC Ihal lrFe mrainn¢ Iztwtt: ~ eM ur was small rcblis b lh<'r ranamsz kan apuar<s wouF ,:. em w<.uo f+oimd om mat awv<nisivg wss reum csi~<ctcE r,tha lMn anval ul<S lh. wvarkn¢ W IM1C <rron migh b<mgali.e aM kfge moogh so r<suR m, nsgatiw or rzro asympla: bias m lhe knluquara slimak d u~. To wlut menl al~ecled rsshe~ th,n aclual aska form lle base fm adv<nisiry dcnsion m IM1e cigaMn Inevstrr's unkmwn wilhmn mort informalioh unkrwwabk. Th Ihrutt M daqtt l was thaf .dr<nhing .d'ryns rapiely lo cMnga i: s.ks in the aggregate If Ihn rorclusim boMS for shis i:qunry u wc0 llrc eilf<rma bnwan sapeeted .M .mil vles wAI be yan<sm.n i: nual daU. Whal 'v 'vapon,nt Ilwugh. 's lhal lo IM1e <at<nt thaeapaYallon gvide adrerl'si~ dec'siun{ Ihe Armglh of Ihe presumi: un mal kaa ayoara matt ov<r<s6mam a: is rcLuwd. t ft sheukl aho be <mpWsirN thal lM1ne results erc azymplmic fo: m,ke wbidr bou ontr rm lle nor<Ir Unur aysmn <unsidcr<d. ih<fz thal conaidaation of expeeutiom sams to dar<aa she lik<% bas i: thn o¢does:wt prort tMl we oMamd mazonabk rnvln e, ovr sli ' maan ora nom4nmr srskm wiN ony Lzl.c oM<rralionc Whfk i doss ke G km fikAr thm wc art mercty obxrring lle -larnim o wn/da w< h.v„Imusl «n.in7 <a<ludal som< Irvlr <aog<am: rhangn M adven&ing that bsv<nolhing to do wilM1.uk: win x,lm in<arr<.r. m mRCr a fb<: ®.<s om nr«<aarc wal h.r< Ihe e/fM or laking nm a lhr .drsrlisirq anls Ihoc s.A.r:ges m,r art rvlYaog<no nlM1Cx searhari:grwlbingtuduwilM1aksorrilh t M1e rosas dneim ining saks. If lhh pragreph campklelY desnibe whst goingon, wc an do nahirgcattp rcIY on Ihc IcaA'sqvaraMlmat<4 a IM imyonam nug<now ekmmu arc na oburrabk Thc insvv~ mal variabks <stimala a:e ni0 wns'stcnl but Ilrcr may bc puitt meR irnl. 1690 556SS
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A~,,
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1~'H Jv.neac al".G s u rwxns5... lunW4to saaBaV011%f n rvaJ!w95.. weaaoll%41 nw.aPWS. 9 -w.ou1 ue41 uapu pwm!w w a uyl w/ vlsP wnovea~n ol epw vn quamisofpe Ou vre8y'15 al4n u! uw4s ve Yff'a N anle" 1W a4J aol ywa vl1 9e^Wx'a WamEe P ~' ve~ ayl cvw!u!us leys a P ayen a4s Wl ol ZOleuvn! rys av.o .4 We Y J Ye ~^J amn' a4t v a le4s w!uunoa a4s 8wu!elv •!41 op aM'HalveGx uul 4a® q!i'S lapow 9u!Il!I JA ~R~!nn Slle~l 'mP! a9 0l c aarys piJew W W WW N uw a4sP. 4essavu ve W!W ma myl.mw ».ou a,p ww4 pe ml ames ryl aq [II-ISW Stlj P sn">'Jpw a41esN1 We wv oa mm sWv.aN! ays aeyl ssmw .aun6v a4i ve a4C sw!w1a+~oa +a4vn1 ns o!pnqma 11 S IaPOUa N epuv pw!ealsuown ays x.o9e wlcs suqswmv ryl m mis!ppe u! 'Rlayav0~ :C'L- We %Ib wuqe aq qno. suSW 8 weerl We ue>,aawtl aol ~ewenpe wu '8u01a!W^Oaauoaa4sT~4u :ESIwo9emP8msiwapeauwJlaP a8eww+aA m aq qaon a~eys Wjmu aynuavad sqou.Gy vess <pnas Jrye!S a. Y.t ~e wDSiO•11~wuVwwa9aev ~awa~w~W~mwu Wa4~uowYV!Ima9'+V~alonxWw.aV J a~ma4t. 0649
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punti<a~ione. Tnv dMr m m<aia raain_ ,po mdo. kkvis aM omdsrrc urM' (rH t<rycz~.iTlul~ rmpouink m oF a nrmcmnnuaeaaa rDnrrwlarrrminoxamnr<Mm<=mcak nom nnnli:n<a aal,. rM in srgarn wi.ning = mk aam n rarca «an mrn a rM proadux ««no=waao ux Aav<nising Ag<escmaracer :pcnaog in rM mmnm.m mam. AnaMr apmmm woeld M m ex y shox mMis snas wer< mnsuref in all yearc essmsblly IM prins mMu.'Anvrusiv<ly, om wuM simpty u= ap media mrxsrvel in n<Jr r, /gnoring unm<asurei eaperMimrm aM ignoring cM1angm in IM ed of ineasured media. Befor< cmberting sm enhcr or Ineu htsa wursea Iwo nYposMxs us1 be IeHed: mlal TM firms invehya aa n<arh i4min/y b diNding slrnr aM<r. rsing among rM1e variovs mW ia. r (b) Fa<n Orm u comWwt in N<way p divbe ik advttsvin86udgd rrg IM1e varieus media in ail ynn of im<resl. WcsM1ell now csamim IM1e=iwo homogeneity propmisiomfortlgaml4 adv<nisiry. Wc wiil uu dab for f960,1966 eM 196'!, when smde 8roops npon<d cepcndlsures in sM <i8M major md'n diswned'n appendic B fm iM largcis advenixn TM=nomberf art gi.vr m IM issun MAdvMising Agc IiHN in sppeMu G Wc wip cortmtidax ft prim mNre into a sinek medium, sins Inc print mNu am atl mmsund tm tM mlirt poHwv pcriod. Table 56 shoas wcn wmpany's spcedirg m print mcdo caA yeu a pcrccnsagc of tnev total major mdk upmditur¢ Nm only art tMrt widc varialiam amorg mmpnitt m IM sflmc ynr, bH sluu mn ssabk diReunces vaou ynn fa xrcnl d tM frmu It tM1m appnn Nas uu ofoMy prins media wauld kad b xriou We mux now e8ammn sM savrq poxibk covrx aradiw d'ncuxN abov<, uu of all n 1u mnsurel ur ntlr yne Tb'H e<yuim a sex of sM nomogerkisY Proposilfom (a) and (b) aPPlkd to all majar mMla TM mual tw M homogwciry hypaMsn emqoys iM Nimlmre ' tic. ConsHV a tabk who.x cMumm rcpresens pmsibk oWwmd of annndom nrunk (ie ow nse md'a) srW whox som hDnxnt d/kxnt pnpukliom (IGmH auQ/m ynni 1)re cooats We uumbn a oburvariom/<zpmdisurni m nd all mkviatn 8 HasiHk d"nvibuted Sows.nMa.r 8 8.swmananedm.rM~a'nc. arymplotkanr ns mi.sanarc and uss snis lo <x Ilw nomog<m1s> nYpmncs's snm sM probabilitim Dw dattminc m whicM1 sdl an obsr popnlmiorrs. n wal mn ar<mc samc 1., .11 Um-unn<y. h m sM Dr<um uu iuY wna m obHr The tea nmlty depcMS huvily on iM w t u. aWa mo umMr MoMcrvHionao u slHatiul moudux, IromasrvmeIhl mch dMIH aspcnaing b a=qaak obxrvation. iM nluc ddsi s9uam w'A MhugcaN IM hypothne of homogwciry witl Mdxviml rejed<d in au ~s q on iM aln nvM, «M1 rr:nian adlsrs k tYc mx obscrvHion tM tml Hssixk win M mwn mulM atd il's moc' ka likdy Ihat homogemity ain M snXcs<d. W< inm maH wrMw1 shH tM cM1i~wlmmepproad nnrrd scmibly Manpky<d inomwmea A xwM apprmA, basnd on iM analysc d wvaAncc. P<smiss s makexasisliwlly vald s<N4sina k dom nd su@rfrom IM1is D- M swk. UNmtumtelY• sn's psottdurt dom nd pcrmil vs b snt yus sMlrypotlssnwe kra4dinWemnlMwM1MeePSn mkr fsm .nwsn ks bodgd IM same wmr n a0 dMr frms, bm v urt Ux oveNi kvd arnomhmnogpu+lY. TM modd wc cmDloy is IM1e following: 5./r) - F. 6r Dr F nrNA IS wM1CnsMsubscrip Irckrs b mWuardj refmto fmns. Thesnmmati n ovn sM su ma~or mcdia counlirrg an VriM mcdk as om mcMv 5E90 5S5?S
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J!n<rrnJa< mJ<rcnd<n , rb< !e J,+a in8" marsavJr,cim! d r< dng VnasigniGCnmrmuniriwnrrma:R<rnaJaam<el dRvre. <. nrm.. m< <«rtid<m m.ggm mark<! .har< w':,x aig~d. fc.n!Wl mrliW mesn lags wrn< 5E'] years 11 iggel! & MYns/ und 9 years (Amcrican/. she nm o/ wnicM1 a na smsibk. The prolua mia ind<x gai(un!ly in ,u far Rrynoldr. Ame P kar lara?and g wn h W illiamson. In tne las! named rcgr<a,on, n mgsrivc agn ro M1aRas I/M9/ a mp!<d so d<a wi!h !h< probkm d aimaUn epva bia} H mined shm w n bNwcm filt<rM aM n fXCred <i8arcsuz R<vtla bciry th< firsN work whirh <aPlin!IY deah wirb !M1e problem 1 - ovsing adversismg Bazia psptt waz one of !M1<few ertor!s!M1n ats<mp!M ro allow for <nanBa m the prircofa- ZU es. Sinx u demaM <pua werc nm idenn .m<rrw.M~ nalr<auXameiamx~mm - ,rlm 119d81 a!ima!M sU dirterem d<meM mnc!mns ror n!a c,n u Tarlmmrson a robawo prmuc,a naing murna g<v<nv<xraa aa. on aa.<ni,iny m noM or!h«<!ima!<d <an.bom w<r<m<<n<r- coeReicnlsaadv<nisin8signi( n!. In Pela 1.171 ) 1 at rt!he dureHli!y af uv< o on d<maM eremthraP!ttl ind to us n orc of wbids was cignrn„n sing's N< usN s ngle<VUation mc!nads!hroughom th< nudy. buo nill fovM rw signifiom re/a!ion betwm, iMunry adv<r!ising aM indus!ry d<mand. A numbn a cqvetion w<rt <s!ima~ad using pubFShN deU f« iMividuil brarMz Somc branda w<rt arbilrarily csdud<d rrom !he samyl< P<ks conduded !ha! adv<nisi,g imermcnl hsd a M1alfdik an rhe ordv d I 3-1.9 yno in !h's iMUnry, bU menY d ns eVUalions <as doud on !bs r<sult In a numbe d eqna!iom !ne adv<r!isin6 a eomr<titors did na m!a signif ntly, a rrobkm wip m m chepra 6. sM aev<ra eodrsienU ntl !h< w ong nz Fa aN tXee r<zmns A s d~-X ro aaep Pda condusions mgfas valw, shou8h Fu aulU n eny art arleinly !M1e bm oMairroi atnenudiesdis<usttd. r Nom a!h<x nudiea pr<unr r<liebk <a a a advMiainBs <Ircnr on <ithtt !M1e toUl raks d d8eretra ort!h<aalm a eny 6rm a baM. In f, it's rm! arum on tM1C 6as's d the publisl.d <rid<na Iha! znk r< !ivmhip co !M1ew Vvann!,<z w< sl'sN re!um !o inix n1n<M! rorm w~ annad ~m nx~na! mm< nav< amn<r d:I,wi<: aim<a meml fu,!c ns fm inJUS!ry a wnok !bat M1av<flak<n <ogn: of adl.< n ng"cGm alty !hry bav< fou!d !n<demand for <igarc!scs lo h bmh prl¢ aM nrco!m in<laslk, but !hsrc has bttn some srmenainry abom Ihe !ime periods involred. <xhall <nimat<a d<maN function wi!hom adv<neirp m<lup/a Q !!¢ the ~rseavry daU arc a! hand bm we sMll allow shon-run erM e/astwtiti<s sa diR<r. I— 5.0 pcluundNwa!ion Tabk SA pr<smU tn< nota!ion ume ra tl!< b,.k variabks rmployd n rb'n NWy (ax !he indiuted apprnei<v fa d<!ailni d's<ussio s or tta). Th< bask advcniring daU wcrc Adv<rtning AB<a!imato a oi Ld aprnding:!hn ma ddlar amounU w<rt dMa!ad by 1h<denmor e<rcbpM in aPrmdix A lo gn a mmaure a atlvcrarmg mesaae<z TM1< CAx ¢rim art exaqined {n tls nan s<ainqa!d AS m!n<ncxm chaplcr. Ggarett< aaks rigurca art basiraliy fran Pru, h Ink, aM whokaak pru:a are rrom SU!Mard A Poorl Indus!ryc5urvey~ for Tobatte. Oth<r firencial daU werc rakcn rrom Moody s IMusVUls. As thry na!M, <he Mak variabks bebw the da!nd lirc m Iabk SA do na! rchl<!o any particvlsr Enn w grorq d rirmz To m rcbl< thcm, xc wiN anDloy Ih<mRxn limd in tabk 5.5. Thc su?a'P mm!U that IM1C wrubk k capr<.val M ddlers o. <igsrtt!cs pa pe!.wn aged IS a,M abov<-Ihat is, per'po!msial smokcr raugAly To 8lunreU In< uu d tbes s V Irixq <ansktt tXe varude CAPDA M. Thn quansf/y u r<al cigv<tU adv<nuing p<r pot<ntwl smoker fm all fmu olhcr Ihm Amttinn Tobatto. Amainn's adumtisi,g e d<unod by CAPAM, a!tl total i!Munry adr<nnine u rcr- to u UPI'. Wnen a rtgrmion invoha adver!isi!!g uq Uks ror anumba d frcma !M1e suRu X% xill be u.ud to indiq!e IhN atl rrcms ar< rcpresmted. In pookd r<ereviom,l6n rarhbk DAM e orc ahm Iheoburvations pertain m Amerinn Tobaao erM x< Mherwise. Simihriy, DRE n on whm Reynelds s being considcrctl aM xm a!h<rwire. /Nea umnrt aa!elvevfs.e!4~ss~atta!we.nktr. trmua5:am ZE90 b56i5 I
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51954 0668 :S . '/oi rt rva~wr5.
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nan. m wninri„m .nnu x narMrn< ad. i:wKatms a n~ugali.<I<ns ~a .<md<m ar ns. rn<n,mrrnm m n« a« m 1 .dBn:r agam> :r~g<. s. r r. na amnn:mk w m~ ,,,Irinmmr<uuan. sinni versiom or mnetls s.l. s m aM s tv w«< maidnrM1 zofzpuarMresiduaktorbornOLSOaM INST <z urred a msllnl valuc of < minW. O5. AI Inis liny r.aluu ane frm wouM n«L m slr<M E10 = I,oag.5)6 sim« as Tn<rc erinordertomainlaindoobklM1<lal«issnared<rt<cliro mucnuarrorn adrc Indr n >nd .< ha« bolnnd lo «pon tn<d<aik Oc<zhwla mrc, ilws~ ~ IM1<r>os« < M1e kss tnc dispersion in frmi shara of <Irxli.e adv<ninn6: n<limit az e go« ro nro, all AS's go ro 4. Herrcc tnczc nlimac on md a ar diRerc ning omkyz a nr e<~«mrn>nra or mas<rnana.n m mer mr« ax<Ir- n,~a~~<ansrraimm ~limar<. nr mnda s n>r< si.m in onl<s.t rn< bmr nr tM nr<unration u a beforc Tle sluMaM crron nr IM1<« yn. <«Ir<.nr. w<r< na adiasrm lo us< aanam a m< raa mal < a rria trtr <a mmae o- m In< ama w Tn<ral s of R' In mbks 61z~'65 a« low mainly benus th<d<pmdem .ariabk e wrirrm m a frst diRCmxc In Icrms otkvd; all rcgra- np6in w<II ov« 99% a( rnc varinn¢ in marka sharn sr Nok rM1al rM1r INST <srrmara dil&r only slighlly from Ihe OLSQ 6gur<rs in a4 ubkz TMS is p«haln ro bc u,e<tM givm Ile resalb of cn 5.5 Alm to bc <a1~aclN 6 IM1< Gtl tnar sne INSf ntimmn gcnerally Maa morc migM1l on curceru advmleing and, mnseqamtly. the mlimekd mnn lags ar<snorl«. Tb< anwnztrain 1 vcrsim af modd S.II slwws dimmishing fUUms o ndvertising sy<Ming sins rF<rnimalad <e ks Ihen one. A<mqirrg lo bdM1 OLSQ aM INST «limak; g oa frm s an AS twrs as hrg<az IM1at Mo« of its compclitor; u mrN adverlix aboW jRrm u n otsp.m rxti.ari:m n iarmrhr aaw r.denmmsmMt«r6amatet meuaa. ...,wnwrl„r,arwa.r«sd,awwr.amw::s~«aa.~i m.drr.~..rm..rl.. 12 timn m mudr az th<semsq firm Alaq tne mmn lagz art short«tor bolh OLSQ aM INST cuimata d thc vncominined kmr than thc rmponding mnss ra'nr<E <atimetn We now tum lo a mort 9namiutiv< <xan:nalion cf om ruWts aN o Ih< s<kclpn N a yrtkrmd sP~-on C-duing only 1>bIm 6.1 - 6<. .rc nrsy olilia tne uarMard Fi<p zo mmpart th< rario «mbl<a walymlh<n:«oLsp.emaR>,ymao Iio/Iy <orr«I for Ih<INSf r<salt; 090 55655
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prd:al iaJ rc dra•mk arMa. 1 cr. u Jc~narvl i. caJ :~aalux n rJ n anl aJve vinRni. avl adveneinRCam mnsrminnl m M1aveafneciselY ~M,.onx~ JYnamnn.vfx:n aule ceMi:mioil:is rs~Ma~udy Nerlove aml WauRh11451A w~Mrc only edverlving M1as elfMS MyoM peri:q. hVidak aM Wolk It95i4 ia an carly paKr. sapon sk rcwhs ot nrch nudre fw u emed malor iMxnrial cy do na formally cs any pa rs b:n IM1Cy a M follo- modtl o( sala rcsponx so +dvenising ic g rmauYararm: 1{crc A n advenising. Q is saks, ar-0 M, r ar:d A arc comlanls. W hcn advcnising is slopMd entirclYs,lv deraY mWnemully ar a rafe A. M kvel of advenising n chaxged sala,ppronch sM new epu4 lihr:u axpommal .Msf(IM+xI. whicM1 depcada paaisively upon All Thu kmoea Rme nl rhan IM simpk Koyek k& tbnugh R n A(rl am. na laege, sM Koy-rY rormulasion may provide an adrrUUaacappro,imalion. In anolber operalions rtscarch ssudY• &ajamin es at (19E%argud kr a mo omOkx kg slenaure f evNm¢ on uveral shon- dara~ion advcrlisin& campsi8m aMrfrmn anelogia wirM1 epAemk pheno ry fty propoud tM following madel for aks respons lo an nolaseddvMisemenl r»r]=nr-xntlr w.zvl wMrc s was rM lime xin¢ IM advenisemem aM a b, c aM d wcn Ix Campaigm Ibas involvM sucwnixc isalated ada prnduml su¢assivNy lowa ycaks: tMSespnirx pa muMSiaimd insYUSn in advc- 16iag was tbus - fou:W by intcgrasing (11U4 TM authors fouM Iiul rnpona to a syucna af ads rosc Uuik npkly eM shm ka to sM sudy nate In fbnr ...Pb. sh now nndy slate ras re,cM1ed fw all prenir,l pumous in kx sl:an avm movth, The rork w~mss tlusgromc4iclaBslr luramar abeadepw¢whmshonfineufa- va6ercwnsidcmd. ~ Oega (f9(OI aM SsiBfa (f9611 hne propwW mo&fs for saks adve .ing ha n dillus arel c JiBVV~+n h.rnmlax ry rnliat aN cU hrnxn mks anMnh(uclvanbedN:wx urclJ:ta JQV_IhIK-QVI-KQIn+QInQ'] 14w1 d, K - Q'1 whera Is po~en~ial aala. Q' 44ayuilibriu ssies aM h e a mnsmn Tbe wlolion m 14,111 maY M rem 1. M of 16e form wMre C. is a posifirc wnsuns delendinR oo ixitial wMilions aM Cr a psitivx wnnam deprnding on b asM Q'.'fhe rylh lo cqullibrium an Sshaped logusr curve, with Ihe mon rapid i- in Q ocav nnBas 1= 1• = CagMC:), Wbm t' is ~rcar ma we luvcapproximasely <xponenllal pnhs belwcen sleWy alasu TM Ssigkr modA s bawd on conueias phanomnu. Usi~ sbn ume nwalmn,: ia (a.llt fM romieuwa.arai.n orlw proag~ yklda (Ui) TM solulian to rhk mndel Yklds en nlwr:enlul epproed lo Q•, jusl in IM Koyck kmwhlion. asAil of shn work soggnu Ihel lhc Koyd m geomelric 4g nrM m.r ha, 6ir eppmaimafion ro IM drnamic imp®ct of.dven6iM wben Ihc limc Krbds iavelved ert fairty b:sg, sAougb dakrminilj, Iww mucb e'feiry bng' period fw prsicu4r wmmadilin mey d bc nryYlVery link shoughl or riral mvali8asion smna lo n..~ ban devosed w fM yaulion M whnhe. or nw an demaM- inllucncin8 facton openle sMOUBh lhc samc lag slrucmrt. O] SmnmmymdCarlusiwv TM rMiegs of mis dupror w rt yuise ncgafrva. Wc ahowed Ii,a ualhy IMUry ar:a sM ysychuiogycef perceplion h.xe ~rolhi~p ro aannb bun lo IM 11udY of edrenisin8 e eRttsx Ws derirM rM arymplqk bas of Ibe aEvcnising cocP knl in rM demaM squalian af a aimpk ! SZ90 6S6t5
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°(iM1iszlwnJi°R.Fm/9E519,Nichollsno~dacmrclali°nnfldnelwttn x+~dLUC4vS~ri oIx«o naladv<ninROf arv1rR<Ynnidz. l x< conNalio° k/l Io .56 wnrn I4~E was omnsN. Ta mhor rmei ~M1c aJve nship 'far Go '. for 19Jiay,cNicxoln.mlNrihaty'r alivc aidvmlising and rNati<ve ules of IM1C tnrtt Imajnrl brand. w<rc na zignifcanrly carre/aud'." T<IStt 119621 <xaminM rne rNasion bctw<cn absolusc adverthing aM absoluse uka rm Camelz aiM for Lurky Snik< in Ixc M<war Mriad. Irs a a tnan u~eranmy.'s H< shm a emM<d b rz Ihc imrren Nlrelativc adv<rlisi~p on marka shares.lAS vznal<d mm~aMCe <. T<her dtl rwl imlmw Ibc rc0uircmrnl sMl IM mm orsnc FrcaiclM marka shas<s add m unitr H< aMn faikd to allow rm Ih< probkm, m<m/oncd by Bordm (19<3) aM olh<r~ snal imrcass m uks ~FmbolxlheMe-wera~Mlws~nwarymiadaT<IStt(ooMSh mpk frs~ordci or Koy<k lag msnanism adryualNy Jcuribcd Ihcaiimermm afphc rzs~nu °( rc vc a r<lal,c adrcnising Fm shc Mriod >9, an lags rangMrfrom I.5 Ycen (Ludr Svik<) so ) I Ynrs (Cameisk whik ror sle yrars 191LL<]. sxc range wa 16 ynrs (LU<ky ScrikN sa 26 ymrs ICamNSk For Cls<ncrfxM. snc mnn lag was 1.9 M1< frn Mriod aM IF y<ars N thc sem~M.~a Tlsv rcwira sugg<ssM shas Ixe Nkns ot adv<rsising wcu short.livM. For Ilx Iwsswar Mriad. T<IUr sook produa innovalian by thc six targcn frms inro acconm by ronsvucsing a producr mu indas° H< lined su varktiex or agartue (fm imtnm<, king-sia°d non-m<ntho- bl<d/inlxco<dtttMyw onsh<mnrketlhmassigrad.uoraofom lo <aeF M snett varieries eortapondi~y lo shcir borion in shis 1 n4sTheu wcrc, or rnuru. purely arbilnry numbere. Any amMing a<yu<mc <o4a insl as logicanr b<' uaei to mar 'o<wm,;, am sv db na dN<M bis <Mit N e partkular wrdinai mnrvrc. Tnc iMCS a anY firm in anY y<ar wu Inn ddned u nc~ weighlW avmge Mshe.x srores. the w<ighu bein8 tne ruaions alhe firsn's mis of a<n>.anr. nmm~ ai/ri<u/lr wim Ins pnw<Jurc mar nc a nn N<arm il vn nsiJ<r rvsl Lm kiMS i+f ciRar<Ilcc non-fRCml aN fxcr<d. Aui, Il~.a ...+r<, nr nm aml Iwn. Tn.,~ in Mr.,t r. In< im srm. ~roaal mix iMex is Jefned as IAs) = CNAl/ + iF,/sl]/CNArI ~ FAo]. wxerc N,(l) aM F,(i) arc Ih< xh frm i ul<s of nonSlrcred aM xltcrcd cigar<lus in ymr i. If wc kl N(1) mq Flr) b<Ih< Imal mla by all f on snes Iwo varklies in ycar " tb's d<flnitlon ®n bc wrillm as I JN/r/`/NAiI, F i(Phll(PA~/l , (5.2) (Ar)ID MSAII `Tf~ll`Ny)/ erc M$Is) s th<mar4a shnrt M Ib<ilE frm m year ~, aM Iryrl e taal u1c. Ncgeretres, equJ lo Nlr) + FUf Laoking al (53k il u na N<ar how IAI) s.<uplwswl lo mmavu MWUCS on gringi~ ous a xw Moduu dom na cnsau mlet Ilwugh isn on. Saks an in fatt inllornc°d by indn.nry Iradi mblywhe rix In (P/t} Once shc aw vaeiaia bcgin lo sdl wcll, a firmi rtbliv< staMing m Ihos veriaies, (FWF) il tbc yrmM m. dow ms dcpcM on produn in~wvesion, bw on a wMk hon nf shings_in<luding adv<rlning H k po.csibk im m~er wmdy to be Ihe bsllrm to bring oa rilscn ba so advmris th<m o wcll shal your ahau of roul filur saka climba in Ihal ®tt,'u e ckar shss'/' e nuanin8ha HiuorintlY m th< aprH/c induAry, Ine Mative uandinp af /he f in Ihe Ai&rtnl wrklim did na vary muds. whik Ihc uk af mw rosc dumssullY rclasi.< lo ok vericlics Tclurl ioda wu mumriq shc firmi abilisis to hoM tlrc'r yosllioiu in tir nprding ~s SuQ a variabk ahauM h<sakm u a wanthy m b«.Vbimd, ralnm thanaaan iMcysMrnl variebk n an <quarion <aylainln msrk<t M M additional problen wilh TNurs srudY or Ihc patwar pcrioL wu Ihel hk deu did iwt co,tt spcMing m ag nrcd'm Wc shaR alrow m Nn on slut tne mn uux scrious Orobkms m th's Wunry Sinc aRafmrefdo not dividc sh<ir advolixing budgen th< amc way nmong sh<vnrpus mWia mmsura a tasal adrenrsir~g speMiiq snnt do na indude all med'u may be yuiu mokading. T<k<r ran regrmmm rar uch Nlhe As myor Maducers fm t9<i59, sing merM sMrt u she d<peiMCns varubk aM 6ggd markn shert ZE90 bS6TS
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cr<d, reRUlar.sixil <igarer«a 8y 196), rl:rs bgurc M1ad hcen r<dn«a ro /w man ur,. n rM1C rerisd 19a5.51.rFe Fig gniners wer< nonMrered.kingsirM Frands: sbeir share d mnl nln ros< ro 3g.b% as sl IO ll% for fibcrN F ands. During 1953-SE. nc, frrt «pons IinkinH ci8are moking lo lung ranm wc« WMisheQ Presumably bwuz of rhs, she es af (hera began b irrcr<az ar thc csperar or bosh regolars aM kamgs. In 1961, ]IS%ofe0 Cigarars mM wcrt fil«red, whik she sFam of non-fbaed kings had felkn to jun ovtt 11 % &sNes she shifla frnr so kinp arN Ihm ro fRen rhe ponwer period w a prolifcrarion in rFe number ef brarMS. Somc afthca mr brenCs a g«arh dilr «nriald rmm aiair~g ona ba mam' MI'<ra embodied nnv f tnra md u 100 mm Irngth aharmal ftlsen vM n. Fm pu ss M analysy orc arr stip en cigant« <quFakm ra nolh<r, Fol wirh les eonfidm¢ shan befort IM war. o mY knowtMge, rhe poslwar history d aga«tle pkin8 Fas neva 6een mmmarkM m any rcedily anilabk form. Fa ths rwswr eMfm M1e lighs e®srs on rh< iMunry, we shatl now outlirc ciga«ISe Mix m f9a5 through 196)s mli:mpr'rsriECmhr w nr.irrol n rcc aom 19az nnfrl ScM<mF<r. 1996, whm R<ynoWs began nlbng aar Sans per shounM rm dlscoua. Thn maY haa hm duc m a f<s af fmtM anlF ° Reyndds r mN ro rbe faW in Augus4 1950. s PM1 ~ iti 1950. p.rs a ki rhe ngaimd a rs(whkh mN ror<i ss vndn lo% or nk.l wa< ninea e snts pm rhouurM over the pr'rs ar rcgulerv In Mar<M1, 1951, both priaa wsrc fai~ m a commen IcM of S).9a pc Jwuund M a dismonb arq gross of kdent ez<iz tax. nmttian nisM Ih< pria or Po9 Ma0 b SR.03 m rMs rime. nc~ nan two yeara w<« a bir dimrderlY. TLe iMmrrr ^%s <karly n abom Fuw ro pria tM1C rzwty Wpulu frltend bnrds, aM a umber of prictt prevailed. ln addiriora some kingako5 hsaods w<rc raixed ro rhe Pall Mall pri<S sorn<wem m S83a,arM Reynolbremained at S).9<. Oy tFe erq N 1954 al/ kingsrtM brands m'A fa fg.M, aM by 1956 tha fil«red prwe had snbil'vxd ar 58.83. ruis<d in _ xrxl mar IrarrH<d N roM1l< ma5 si r aM kmHaiea rrim w<n mil A l m niud,IFe larr nlhepasofblmrcTM1is in<d M1c <M ofr196J Pritts raisW in 1965 ard 1966~rM1e larsn ,n < sionN r crbal arnck from nc~ WM1irc HOUSe Twopcfiods in rM1S bismry mern delailed in essigesion, whkA e unfortunaldy omske the smpe d sM1U nudy. rhe (nr e Ihe 1955-55 n of unxlskd cmMiriam uq wNespr<ad dcyanurt from lixtpq¢ Nensity. llz sccosq's rhe femarkabk 195)dy pnial af absdutc pris suM/ilYIn addfrion Wsserm M Mirz kad<rfiT shmrld Fc <zamind. Ow insernling fenmrc a rhe poqwu pc.iod hu bmn an apWr<nt n the de8rc a munnpnly. ae mnmraa Fy 1.<m<a m.amrc. croa profYs as a pcr«nsa8c N rcrcnun rox rtom 10)%in 196 m 30S% u 1957, for th<puMidY-hckl frmv" ific percenrs8c foz only sligMly3 l0 33.9% u Ihe /95]d) period ar psi¢ Nbiliry, but n<IimbW so M:J% by 196). n 1960. sbe 8urgeon Gerenl's Repon linkirg agvrqs< smoking frmly so lung ®rKer, au Wb1iYrN.'s A swriaY of wmequema followd Ro:n thb CuNinlion. Ciga«rr< psckaga wea «qoirM ro bear v waming thal'Cya«rl° Smokin8 May be Havrdous ru Your i<aRh', arq rhere wu mud np abour regu4tingeigar<ue adv<nising A nomberof bnsak emphvsixls:Blow lar aM nirotme comea appnred. TM'equil lime pravision wu invoked in mdm to pttmX wmM<nbk - moking advenisins ciga«rk adveninug wu evem9atlr bvnM (by Fednel lawrkom Mio arM fekvision u alanoary ],19)1. Fioe/ly, thn ci8arcrs< mannfaau«n hav< in<rasmgh pc8un so disasifY into aM1tt marka; naablYliyuor md (ood pmdons. TM1C lad: ddsp on antLnnokirg edrcnising maka d Impnuibk so a. funy sm'ifxd rlmn.nd mncr rm cigartnc fof r<«m yors .hmamqr.eeeniarrg wn mgn Irm«wad aie<..innrmr maktt h mora aiPrcJS w«lau or<nn aaN on pani.NU nmu ro mck aaivir In the agarqse mahq. F« xhez rcamn; wclratl «rmioa« wr ssmpk +.rroueu C: rar w°v v Mma/.IMwmsa cr°n Tta skaenzam°mpnbam~aaW<uaumenvm~ wwi BZ90 556TS
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v airt<r< ur<d adv< xing snarc mrk, baw n andlV],I,iRBrc~hMyers valsnr<dinduxiryadve cingkli amrtll3 t...udirt<r< m<dia o•min woy<a.x. umdsWrcrouNFave SS"/.m4Pon<Sa";. vrn<acon< v mal mla <aft ony w mcd'u nabk n m sx~MUnrr. mainimbecaua IF<eirt< ml rrms do ~ro~ divm< e aav<rlni~ nvd6MS amons nc~ maim mcd4 m rn aam< raxnion. Tnm<k.Iw a Probkm d aMCrmg di.iaiom by ror same r in aM<. rcm y<arx h wnna bcslalef <onclusivcly on sbr bMSdtncs arBUm<nb mrmuinvavingoMymmsaralmNiawiu~rorbcadcmrorcf swaic f ana inMallics. bw n an ne argv<d Ile1 reqs gls Uex muM be Pcrformed beforn sud~ fprn art cmpbyM c timo-scrin Mulysn We now tum to an <aaminalim d Inmmal Revrnm Sm1m I1R51 aaia. In pncrai, e is nos Poasibk so singk avl iMivWVil films in n~ IRS Soma Book d Sutislio d Imomc m advcrising Rgurs in rM Soma Boak arc usabk only fm swdim d i~MUSlry dcmand. Ovr aim wFCIM Ine Int<mal Reve~w Servim lgum are P,~nk.i~noaro~m e.n. mTFcrc is a prcsumMim Inal IRS dau art not uufvl for rimcann Purpoxzr' Tnerc ere sercral ruaons fm snia TFC firsl is the ted IM1aI ms dassAy Ih<ms<Ivn u lo indussry, maki, il pmvbk fm a frm producin8 an uncMnginB Modun mu b swnd~ from iMrMry to Munry. onc,r wiidM ns!<nmd4rg<( maY lo fk a<ansotidalN tu rcwm, ialuA'ng aN wba- diarics. wnik m~olFCr yeen tsa liabilisies art r<du d'dsne avbrid'uria 11k x r AIm, shert M1ave bem enangs m 1. use e4vif sYSt l bYVlnc IRS, n aell az cM1angs ® aibwable ecmunliy w Maakes. gusinessmdilt r m tM wvy IM1ey wpms Re mn dadvolising deMrlments aM in IM tro ml d paiMOf-par<M1Vx ttuls. Pinalty, na all corporalioru fik murm on e nknderymrlW'v, IM1OUghmosr 4rp 6rms da. Bany dtnne inRumas La.e bem al work n IM1e dguctl<iMUqry, wovld eap<n mks a~d adven4irg eaie frmn de gour¢ Baok m bcn.vc anlcmaliunY EiRcrcMh fwm scria ukm rwm aM1n aoarc¢ t..mRMU sl kr. rtMral a.mi..van erNe 14lmm m gRwilM1rnnrederivrd rnPanicv4r. wiI com n saM 6m m MmNy. ndIR5 adv<nis lnp n8rRU wiln Ihe dv<rlising ARC xricz wni<h i~ broedly mmPalibk wilh r<liank Irede eaiimaln or <.ncnaimrn in m<a.arrd m<aia n. maivrea in apP<nai. c, IM1c formtt dau are mmpatibk wilh published Mia mks aM ntimats dnumbcr ddRar<u<s sow. erown dr wiBiamwn n na rald in Moody i ss il is rwl pubrxiy- heW. Conttpumlly, w< ntimalM ils poa vks by mnRiplYing onr tc d B R W's rcvmm lrmn ciprcrla by rnc mio or Maody i zska lo en imarM <ipns~e rcmru<ror sne alnu f re f rma (IM <rtimakd <igarnt<rcv<aie wrie aredecribei m mP<Mu C) OU<r procedwn yieWed simihr rpuhs. Thtt<ar<swo pox~bk epproa<Fa <o IM1e Saura Book dMS,.nich e aveilebk for I9ib5p arvJ 1951fi5. ltc 4rgert au ciprelle fimn <sn b<idmtifial u a group in ncM1 d Incs y<vr; won<covk comMrt IM1c mah rm thex 6rms with tne mrrcspoMir~g Mradjs aM Adwrlising Agc swtinicc Tn's nim IM1c Prablen dmvdidMiun; rne¢ fmn mvy bc d'tlkme rnlhiw m QRUmt yma n wbvdiaria cillra do ar do na fik seprase murns Thc z<oM aRa~urirc e a urt vdvenuing aM sals touk Im Ihe smalksllRS minm iMunry Inal indudm rFe top sfimu s Tabk 5.1I sMn 1hc IRS scrim u pn«Magn d Ihc Moody's aM Adv«sning Age nurMers. A mmprison d thc f aM IM1ird columM iMi®re wis< <karh rM1M Ih< r~gum lMS rt4le only so Ihc loP au Bims ert <baer w wM we weM then tn<5ninm iMUnry'taak Thc Wn attin src pwbby p4gud wiN danga un rh <4a'd'wtion d swm Gmn Th<y ar4iny chRad .hh a 4rgc numbv d fma tMl do rwr xll many <ipml<e In .Mt rolbw; rnm, we will eaamine only th<IRS figures for Ihe bp sia Rrms. y e proMDh sw<<w n alw indunrie.hcro sbc gravp d Grms d iMCaf an b< iso4rW » thc Sovrm Book dat- rvu rhos Rmn shWtlEerovid<rM.gmrM1eu mnjMMC:m<temmalmnwTn w< hase Pr+rormM hcr< muv be uMmatm bdae k on h aakd which IRS miea's nnrtr tM dnirM magnimdcc u wovW sms gM1al xriwa wobkms wnh Ih aW Bpm Iw6aM f941. vrnevks nnmbersdirttt v mwtMy fwm Ine Moodja figurca, dond is on w th<vdvmisi~ nvmbcw A paph d Ih ub tio shown us mlumn I d labk 5.11 iMitam cyuematk movem<M m Ihe yars 19agfi5. We shall mum so thi<bdo... ' I LE90 556.5
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SurmrusymtlCeMfunav 64 b cMper 4 we ndM Iha1 mo.V inamligebn fvi1W b eHaMmr v sd'obk svbtlmuhybelvan vd.meiyaMak. Hem aawrcAniom omsahon<gativ.. We Gest nvmi t linem mvhA-sAVrc madels Wim MM b all f comhimdsudcywlinmapMindlMdvuWnly.eqbalmmu M tMu eoedass of fit sanmp a slan from sn vdlny a mVbm d'dc mong fismx nlha Ihen eaplaining lanualiom N iMWidush lm~s aka Th~ aven9 afimala suggalW thvt Rl RcBmhb sM. Im6 Rmmiar posas.vd a mmpelilirc adramags Ihet lud ~hing a do wilh ad.cn'smg spendi~ esd IMf l"ygns & Mycn lud a simi4e d:vdranlage 6990 656I5
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suJJm shi/l lo <igarc a. nn ~ M1aml, if ciBa < ec dos n adwlising IwM1ik r in~lw in Pcndi~8 m~ o.c ~uIJ npea cgamle sals to ra/ieunlex adgc n6 M1as ~mDan ciRar< salev aagy In IM1e ux ot rAalivc inslmd dabsolotc Mimis immMielca Modcls / I aM I III need no uPboalion; tM1ry art simpk lincer asd bR-lircar demarM cmvn wiN grome4c diuribuled bRS Modcb i.ll aM r.rv diRer oneynavi~oal~gnly m rc geo<raiucg x clora; tne milar o tne 8.'' Irinl in tnc lax on a MOdcb LV and 1 VI wert suggexed byPSlde'a (1963)nodY. Wc c.DCrimrntrd wi~M1 addirg iM1c vsriabk Ds< tn u<M1 d tM1e bssk madck to acr.wnt rm IM1C impaa or the 1961 RcDOn on tic taul saks orcigarcnes WealsoemDbyel tnc two rclati.<pns sericc PR erM PW. ITheir IogarftM1ms wcrt used in modck L111 aM LIV.I ln aR wc ttt4 ma'M ~wcive .cniom or mch d zne su bass. mplek over tM1C pttiod 19ss-s~. min ouQ am Irvsr mnnom w<rc.mDloyea. r« a rot.l or s. As bdorc perrormeJ sne si8ndn be INSTaresuRZ Inooth n snootl h undemood tnal su. tnts ert onrsymMoncallY valid. TwotnirES d ~nex equasiors can be dimma~aJ 9uiAlY IX tne t8 eyuatians inadving PR or IMPRA the pri¢ varubk nad e sigwigum coelf kM ia only rour. No« or IM1C rcgatirs ~ icnx acrt vgnL firant IM1OUp~ mmc d Ine positivc orm wcm In b0. m aw tt¢ both tne OISQ aM INSf enimai« rM1Owed PR to navc a pnsiti.c mdfisimt signif matlM1aS%kvdRolnTd.m(19snaMRIS/19116/ob4imd imitar owl'sfMOry resuln wkn mai pria crin q¢ pmbkm wbh tncx numbm waz tnat ~w +cwom was Ukm d otntt than regulaz- sized cigarala Drior to 1960; ttc eppaMb C R«ulm wnM1 Inc rc4tin wbobsale pr're mda wc~c slightly bcttv. bul n« rcallY cnmuraging. ln anty km d 18 alimala ax a pasitivc Dria cod(ciem indiatN, but norc d tne ncRative weRSients w<re siRaif m at cvrn tM IOy, kvd We mncludd thal itM1ere was a non- ro p'uz Aexlkity d demaN for cignMls over IM1"s pttiod, wc wxrc nablewdclenil, o Ths kava <R euimala Ihal do ~wl in.dve prks tttms; IM1Ox ert prcxnted'm mbk.68-6.19. Tbe usual Nalis- arc displaY<d. With onry twe.e oburvations,~M1e asuil vwia tne aviWaN a mk nw be uud aM tnc signif n« kvcb attaimd ny tne wcificznt akmatcs arc sMwn. • Sy~ane~n n toY.. tS9p 656."
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J/o~ z S~ai cs drriv~ wiih Ixn rrocedure rmnd INST mlimal< anU mJinury kan nluars rnvlu wili M1c IaX<loi 049Q. snbtle ucdepua~ M1cadv< sing.a wiiuxnrt cmrrorcdmcnamcrzronni,ec.croD` mDks~ m ncgin our dissuxion with IM <puilibrium adrer- cvnNlimu, min6 dcas'on reblo+ for an digopoli.u uoder dY- n. (2<61. wxim w<r<.wrn<x<r<~ n IM Idl is ro d dollar advcnising m dailar satn !m ~M Gem JYna b<ing mnsidcrcasTM1C frn rcnn on rM rigM1t rellects IM of tM1C a<maMlurcl wMre s tM ral<of in aM F, and Fr ar<Ihe Danul d<rivati a ddQ/dl witM1 rnpM lo mvil's` Mium sakx Q•. aM aaual ukz Q lM nexl term, 4's simDlY sM lemcr mmmr<of mo~wpoly. TM Ian quamiry. a n tM n<I bngnw <IanicitY of Ihc frmv salu respM ro irs adv<rtising Thx ia d'n tbe bng-rvn dastirity oI M fmn rnpar to wn advmosing a• nTM cbnichr rnpcn lo wmpclhori advcnising aod v u a mnjectunl eh~lcuy Inar g caparM pesamaR raponm d mmRliton' edverlnmg ro a o~ permu incruz n IM Grniv ncn adrtneing. sinm spmir saxa ar< imDOSei ms <vgaMta bom prk<, P. aM marginl cost c. m/sal mv9 M arnss d laan TM1U mndution doa acpM al all on Ine model emDbycd m wcdcmonnmt<A vvi~tM imDk gasmussrn 11952/ madd premmed in Aaplcr 2 Suppac tn<rc sasDa~ wof~pcrudrofsakxSllwriYrgtMBroamarkdDria aa P, m<ronauon ror Drorl in mis moa<I D«nm<a !I=(P-I) QIA,PI-C[Q(A.P))-AT. (3.5) smg Inc nolarion givm etorc Wncn pri¢ s FixW, w< M IM1C fiM derivalire of I5.51 eqval m rq subniture ard obem 1he oDtimal advttrising rvle AT P-(C+r) pQe p s. (56) wb<r<s is Inc ne advcrtuing <laslitity ordmuM. Tle lignd' m ' M1c wMr< aavalor< tcnf~rorn ry1JwlarW«vanve. ncasr non fnr Drori~anemmez rt=II -rIPQIA.P) -C[QIA.P))-nT, (5.51 ana mc orlinul aa.ativng.w<i: AT MI-r)-C' pQ .. _r _n. 156'I Tnc aDDropriat< mwfurc ix IM1m rM pr~ mmus M mar8ind wfU divkcd bY gross Dria. < suppou Ilu~ 1Sd) giva ds d<sirM kM ef Wv<nnMg fpeMi~y and thns aciual aEv<nlsing adjuns oniy gradvally w tDV kvd. TMrc umMf drmmn...... ili, suA panisi adjustmm4 inQVding IM1C resWls of <haptt 1 1- shon DW 9atinidly signifum lag w<rc ravM in tM adjuslmmr d toW nalional adr<rlung spnMin8lo Maoga in ssks d mnmma gooai aM tnn faa tMt comracu (m adrtt~ sing mva be vignM bdo~c sala arc knoan In prtevb[ w mµdoy a FiM-nrdtt log-linesr nsebanum. Fq. (5.C) rnm Mwnm AT e K'1'aryPQ)rA17-I)'"• (S.t) wM1crc Y mcasurttdxc spxE d rnpmttc Wc avnmc Inas rbb hg sttuc on bc vudb adcqvaklY aDprosinxle IM truc anvnurc tM1at smcfge rmm aaDrnalbn rocmaumt smoolM~g d nvaRlz eM Dhy- sinl Iags. Our fhonaR d degrees d fr iau dklate sbal sc iml lry anytxing mort cvmpk.. Eq.15.9/ is linm<'ai th< bgsrilxms d th< rmiabks inroNrd W< maa txe apmir r rm om srslwuR nn.r Dr .wming txa tM rckv.m dmuM NMiom may b< ad<qna<ty .pqoximald ror tM1is puryom by log-lixar r<latiomhipi Bm D<ruR we un wril<oor final<qvatpR we rxvl to dixvs mme d lM variabka m IS"/)aM then m eown tD<msrc anscn 6i whid'n rs imDdded. m Wc uke K ss wnsrant /JI Ihs rnih inroka s karing ovl Ihe on-rn<ar impan d tM ram d imcrnt, ama .rc inxn mam d tM1c riabks thal wvuk M likdy lo aRCd F~ aM tt. Thc <Is.nkNy n n mnsidere! endogcnom aM a fundion d tM1Oae rarubks whkD im u<nc Q. W< treat pritt fwmutwn ao&nous Girm tM diR Ilus d explainin8 digopolistk priamDdicY,tn's m~rs Ihe onlY Draeinl 0590 bS6L<_
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51954 Oc44 Pa>I Po^om Stl s•w+1 ¢ u aev>w ve N4z LIJw lapow wyl p wNVniw ~NI >YL'vaw 8uweaw >In'1 a.ey %nom 6a9 n'lll'S PWw ml 9~ov ve qNyele a>yl'AI S We II'S'i S 4apow ml v'eo4s ve u!In c, W e uwu P+epuws alolJw.(se pww>osse pve s8q aww tNn!zvdev •qenpu pnmM p wis aV, We TeuaW p m,n Wepven' >yi ve a55 pe 335 az>4m ,z /I,ewwns lensn ayl'a!lvsns-s pvwa osse ryl epuwJSw!1 aav'>W. qs>ypveJ v! wa4, we>v>9 811>a,ip p>n4~yea ve uo : yaw ayl lo wwN ryepuws W, 'nlJe4> n,41 v! snyw pe u! pue sy9w rays ui'AI'S' 1 S slapow lo suo!s+>n pw!eqs uw ayl p ulewyw 1SNi Wv 2)S'10 ayl wao,J p'9 - 19 sal9el c Pw!wzsvown P>wz>I se^Ca n,~q aayl SO' 418oa1 p qe.nw! Wyonu! urn iw J>41 'SenP!sv P>unM p wnz >41 pov~uww iew > p anlu pyl 8vumia Wa oml el w>z lennzu! >yl wo 8Wy>+ea [q W^ 1 zmm> lo alew!,ea aw sva,leMa sy&,a Wm ay, ul v sa pw~wsuw p>ouaz ve /. aw^sa4N4+NSew!wW8cryl,IliNleumsvaleMaaa4, 8o svoVewys>u u>m Ae4 +>4W a4, al!4m'DSlO Ws" nlew~n> ayl pePo avniNn,aWO Ze p lelol e•e9'9s61 Go!,>J >41,01 nwflol sw,9 ne ,ol paneww ,nm Nl.w!sN w>sa!s eNWw aays>,eanea'w! ol i=> e 0 W e Z s+vJey> w pwW,ww w,ol ^41 am.(WJwa zny+m Isow ~YS~w. a..Pev ll>pveyss ,leiaw o4nopw n~1ew. >yal se 4an se ue41 vow pvadz 1 Paau I~... w>y n v~ ay leyl uaayw•.w,8wy-w,p ^ µlss>lus/l 8ws~1 npeuo4 w 4 ue41w18WP'~>'k k ~a Ne sPveys a41 s w,8 se mi SY u uvp>8,e1 e ue4, + e++8 4> ll ~aws!P>.p: a,!wll> nw we"owe >we< wl s>tny,,,nw a„!qwx 8wu,».pe p>eilop 4>e> sploy e,yl wym aiws'i = w>W nyl w siz -ay,W.(411nv Iwnseu V Wsn wnaa4~»JS ase4 ayl zny~ n IV) w+oj ve4s w>I sem a vaym /VI vuol w wan+J svm'8w W>J. p,eliop tau !nPPe yae> 4ym anpe v~N.>y> wppe HwY w~p leal a'se9 u11tl1 vuul a s,nJ W Iw pap>apsse. y'wq lev a411o nu8a e w^lun ano yveas Ry uo p.(yroVYPaunatlal~,P uul9wJlv4tpm WII u pey le W.y4'zz zwiu + ulix~. ..y>Yy„uyey>nzuvn~~Iy1- _ _ _ n4{va~1a~.~w xw,~>Iw,ow~ w ww1~~~o P Y•~iX1l~.v www^~I a~we w,no~,~ ~wea ays W w,esvvn! ay^s s+m umn p>,.nm p wns w, WI INm e1R>4l 1 M teyi p>lerpu! (81 w+o) 41ve qvawinJw 4evw4vJ 9eu luapuaiapv! w se 8uminnpe p wylueeol a41 Pn^ 4?4m p Iw>.x ,aqey> q pavo!suaw s>!pnls ayl .tq puls>e8ns sem /8/wm1 >1!4^ •[ N"o!WS w pzt^>s!P sev /tll wm3 -uueyvw an!vsoJ ve N We w'a „ eay,:wanpodwN+eBww(ewliea>..avesuwlewwnsa4l I8) ly+stlJwY-0 3sfltl T'VJwM9='SV (tll eA~tlJl 3 /.1'VJ) s'SV :WSeans . >mSVJ^sw,nlu.xxl )>p pizoJ mu auay a, W e~I xuw sa4 M n,lew ayl ~e41 W~ou a9 %no4x y I 1 lA i A ee ay, se41 mo4s o wyl ~u uaw>la w>pel ao4m W¢'sq>yl ve uu>wap {NSnI xoym mu>I. [Ie,swTWllyeaynm vYl:wlvop,a4voWUas. W ~n w 1 el . 1 a-m eue..= y>N z ,y ap„J >4 u e , >9 A IF'enl4eue.x wopuw p ml>w 11 ~ Y) a,a9 9»'1 uNel Iw>ua8 8wmoilol aV~ p vn ew,yew W pveln>in amnlew nwy,oays4z ^pve ,41pa enayl'Ima ewP'+oJ.v w1sWnJ eoswwn!msemwe,olm=,t!ayl*oloal wowla•>we, i •T [II-Ix%sw+l-ix%sv1`4+[u-1 %%a W'%xSV]'4+/M8U'WJd/so+ IMBO-IJOI•o+IM84'W'1a/'v+ lM9U'3NaMo+IMp~WYd1'e-II-IxxSw-%%Sw N-S n+[M8011-1 %%SY]z4T [Mfl0'll-/%%SW ]+4+ IMIIO'%XSVI'4 r IMIICI' W J(Il`o+ Mzl(1"IJOI•u+fMil(1-ttiltll'n+ /muqaam~~~+lmnowvor~'-n-/sxsw-xsssv in,
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Cnangtin Imerval AlexRaiio Advcn ngRa~io 1455-56 + LU 5956-sz 4z.r - z< 195]-5fl -151 195&59 -10 w59ru zz 19NF61 al./ + ~2 196t62 +30 - 16 19636J ' -LI - 3.6 1965b1 -I-1 -122 19Mb5 -32 - ? ~ ckar wM1al (oras va al work, but whascver Ine rnson, lhe syz~cmars and paralkl movem<m d IM uks aM advenising rafas maFe ~ne IRS dam for IM1e lop su fnmtxhemdy yuasionabk.especially m IM ymss Mforc 19M. AM, ss we noled above, fgum for sM iMna- a whokdo nm wincide:nn dau hx IM wpsu Ornss,<vm shough ~M1ex firms acmumM for abous 984% of ell domutk ngarelh sakx in tM pniad t9596g. Wc wncludc from snu that agarehc iMUStry dau from ~M Sour¢ gaak of gsasinics m Inromc art nd uwbk for ti:rwxries analryu. II seems I*tly sl:al ~hez or simJa probtems willMen<ounsaMinolh<rindunriuss 5.5 ACw~usseni Enimarion MeeAod We havic emphasirm shroughous Ins FoOk thm aOnsiHrnt Mlmation or frm m iMunry dcme~d cqaaliam invalving advatismg muss take n11M advcnising dccisien rvla of thc fumr invulvM. Chzp ers 2 a:q J wlaNlsnd a prnumqion shss frms' cvrtent advennmg budgnsa ax mnummd bY thsv curmn mks, aperiany m en:wd dau. civm a dcmaM spair lion tM fmm of fmms' advenismg decisinn rnks ®n M dMUad, aM IMZ t9ualiona un bs wsimasN n Wrs o( mubamovs synem in.oNing she demaM rclatien a In sM ciBarHlc iMuslry as tlxwhcrt, a prlwi Ihmry (ard snc dis :y Lse rn n.lr« i.:nrllPomlmmme.~a.a~M1rymrY~lllelrwe Iu~hkrwn~nelRSa.u w n~ c1uMn a/ pbcn kw rMrinims on IM1a X:rm ot Rrm r. im JuslrY dcmaM N cmpl s c Jtt im al aJvc ung o cigasc nveryularge numMS of anfJ spnif~ca n IM n~ r. Cnn sm ma of al' rcdaired.lr ptmw ppylw wagckasapua s,tMampkv IXIM simullancovs tquarim nrimalorea very largc numMrafdirfcrtm rcAuttd form muasions woub M1aw: lo bc mnsidered. Many a/ sMx rnrms woud h niHby ron.hnwc aM wc wmH M fortd lo appro.i. Ic IM1em onc way or ammha. mThis is juxt na a workabk appraad: Me Wc wiR wx ronabttabk knlmian by nrryinetl:tapMOaimation back onc qeDWe firsl dcrivc a f t-suge cquaum fm cmram da1W <igarnk adveniilng by indiv. dual (rms tnas un M sMognt of as an approsimmion lo Ihe h reduwd romr equation. TM nnmba of variabks m shsepaaliun a lasge relalive to sM numMr of availabk obxrvalbna v ee ux ssruclural or usal ordenng w dettmtt tM1e nvmM of inslrumenu employM. We mm prenm m. rcWh: nr car,mar~ om rm.:ug<a~aarm mr ca<n Orm in sM iMustry. TM fhed valua frrvn Ih<x cquatiom am dc0aled by sFC adven'sir:g prioc dcllatm dcvebprd in append'u A aM IFc suhanl( -xageestimalaofrtal<igarclkadvMisingbysMvarious firms will M rcfert<d so by Ihe bask name CAH. In almoss aP d IM dmuM fannion mmidered'm tlnpla 6, on<or mac of IM independem ariabks art fan.tidn of sM Erne' rcN cigarche advMisin ItM CA's4 Wc sulnsilusc sM CAH's inw shcx fv~wiions aM ux Ua rasvllant prcdclermird nrwbks az innrumenls nlal varubks alimation. alap wnh 1. abm prcdclttmmcd ariabks in tM dcmaM cqumion Thm ( m c9uasion inrolva log (CAPAM11Fe bgsrilhm of Amerkan'i real advMisinB De pmem"vl smoka, we exstea varunk CANPAM = CAHAM/POP Iwhert POP e poW~ion aS'd IS aM above) ar/d us log (CAHPAM) as m imVVmal variabk. mThex wn.urvcn snoub upturt mon H the aaivn m sht adverlising arabks employed. We wn~ros simD1Y repka tne ad.mtuing variabW by Ilxa inshummu. I:owarcr, bau~R suM a procWUrt aoub mt gnawnla consissex~.r° We mun emp/% IFe.a mnssruns m m~mMrs oftneins malvariabksntemsion.Th'seasimpk mnsn Mprocedurt'aMSMubherobuuinsFefa¢dvarqusassumed 6E90 6S6tS
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W JauoleylW^Laysllnsvswo/yJp!4day~ zqeaw>e wuuw yv! Jap u'panNv t!a.,m,vp w a, 6yaua9owoy W saa4!od14 a41 vu!s Vq u! wryE yWy n Wxvd q 4ue+ug!oJ 9wpwJC 8mqya.W o, wwiv /y!w!Ieuulsta Wu Su!41 We amow! uoGn Nuu puEap wuvu9!a p o!%s,ey, [es W!y. t,l~saa, uosweg!!/A pu.w8 a4~ ~u ue4laseun~saxa4l ~u yl~y vwuvryE os ooa'wa youJ • n any~ )mw rvea a%nwG n!eou,m auoW M,!!4d a4, w"3 m!8u!ueaw ryrov ay~ npuv Wevaws4WuaCCave6luuwWo4s,o/Weiwwuyiw!!1^wN ma!ywE Wy! aW!auw unu, aM'wasun,W aa414,!~ waWmw a4 w yZOOUa,ws9,e,EJe Wu °op sw,J,a4W a41 P p!v!~ a41 Wv b!1od mxvq auvay!p rys siq 1Z5 9yw ~/ Jw0 aofl We wles v~iqv 1p.vay p'au pxynnpe n4 We1pW"i'd WI! saal ail 4!!a 44 1 pu e ot 9u!pwae euwyupe w w,nW, 8wswwvu! f!8uwu 4o!dva n4q4e aq %no.9,'uoncywv mLra pu pp Well!b"I 'd D,W ~ 4 uopcx,l0ua, ayl, Yyv!nla 8u!qu>.Pe ae,q ay, a uqqod puwx tl a%auosw rou pn(ve 8uu!uynW vnpsys 8ursn ea ay! ~q a!u,a!ssqa wwu! au,e9w a9,e! ay,:u&s a!ynuas 4,W WwiP~~s ve Idwa>IW ay! We 8um„anW uu^ s,uuJ a4s l!uo ~u!j ,vo>z>, m wW~e .,o~ wrvowa!p w s~w, amw, wwe+o7 e w. u4, u~ pwawnwua ane4 ax w!am,wp Ws 8u%oo!-,s'ay ay141sw v~e <ayy muo pm9 .(ryo a4, a.a suw,ienEa suao% b!!yd a4i Vq ui 954 0666 ~ sss s Ze ~
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51954 0663 we.4 .. Y.+iN.w ry I^z^Ww. vyaww bu WwamoJ+W +eMa wu q y~w m41 a~M 'w!Ie4ufsa m) ,paMaezs, ve maofvy xa4f <ex ayt w wu PPe Jlenpn~Pwaylpsa,oln4xifwHVlfwsxlwry9oWayffe4f ssn aM'ry9n,en w>P~aP W88e1 a451o vuasaul ayf lo xne»q qbno4fwanela,)o>owear.~ysMleuBiz af9nzoGS -,wlo YIII'J NWwilealewi~sa~yf p!+polnaoxevw~iefs uovfeM-uly,np ayy vo!ley+.oaosne a wo,luw pnw ax wry9oN Wo»s wll 9omlu.peaa4f q zalvs .w,yp uwfqv ay~ n.o.oW4su4un) e qsea yw v,yl vp'uolwas 6ry ayi w of py~e) am se un( poew>p 4~snW~ Alol w 8u,mw..Pe fewllo ueduu oe DwJ w l4 a^" oP Nuo fow'vryes ,) wo tue vaDe w4ue> 8ulufaanpx v~~4vlww ~eyf le>fzuxuou u'.(ninPw al, lo sales lvfoi ays xea,wf wwea 8ufs~~ -+xPeMyl; ilod.f4a4fvnN~woueaanllvo.evu4fwla.nms»J sy au awax u, w9 ~wuanPe vy~sa~MUOa)o iwx,vLwa a411o vo,u Wepueµ' aeael ayl um.) swass uo~snpuoa sf4f x,nw )O pawLeun ay qmw 4aea p oles ry18wu.,a.pe aP4I fol4noP sw,y ns ya P fe41 ®'15~444f P^>I%Sa4f levn)vaxoeaxe>ou4'VL9li9»19ww IlenG ayl p 4>w w a>z u, wns y45 ~e4I nsa4vWRy a4, lo suv p feoW .nq 4e w j~ e p uu~awps> mweeyowis avf ,q Wf»„w > PaeWe vLL 9[y ry ~'^o4s e ILC9 P zape w V W e 2Iral mwfanW P.w.iyW w„ol syn+a, a41-511uY 4e" feyvex xPVY'assa4~• anlxe ,n) ila'Olien I~4`+e a,yi~1 ~lll^a ea ay »~~„ (nf--fxanfrvwl faxnclvxflW/a^~1nw~i,auxncrvn4a,f sflw, ayi sx.oys uv k4e.t auiviwvu.t,f~4,u~ „~.ul.,, yw, Peew.,p sePm )n sy>,¢ep ay~ n~ >mwpsa w enn.>,nu II d vl.~w u~ flu~an ~a.zpea »W~:umopi. w.iiD.w~ p~ uyw uay~ ~ ea11f., )vsls ! 1 .. I ..f I .y~.yf ,., Irl
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apprna<M1. In addilion. Fisher (1962 rr.91-%1 hes arguN d~e~ in lighl g~ro4es sodi as tM oRare n d« m.vking ,Irr~< nn<mrdra.~mm<mMnr<Ja<min<a;nJ<ma~a ci.< rnang< in Ih< . mk m- d<iR,r< <r knm 19Sr 1 is prcs<n <IM1us e Ih<d<g of monopolY.'4sa k.olg<no along with rM pritt, epprar'rngrin <q.15 ]/ Thal pricese averagc rev<nu<per dgarnK which ae Mr<aher rckr ro ax PWA. TMs variabk dilren fran firm lo !sm u prodon a airt<n mFaN rrms d<maM ia ,i,iy innamcd br i'aavenisirrg IATI and lM lo I adve n ng of ib comqlimn (AT{ The edrersing of o1Mr induslrkn mayrmauer. bW we negkd # hcrt sin¢ it'n/ikdy to be a minor inno<nce qner imponuu variabla artening .uks a~e «al inrome per uviu (YA Ilx populalion apet 15 aM ovtt (POPb IaggeA aak: (QI-n am {N-U) aM maurt qi« w<haw Iwo prk< riablw rcldive mail pria /PR) aM rclmive whoksak pr~ (Pw} ind,deaavmmyvarubk/mM1a/ron<ceodforeM1angesinbsk uvsN by tM 19M Surgeon 6emral's Reporl The varbbk u e9ual ta 6r IM Ywn 19646>, aM uro otherwiac on Ne,avmqion tbat ~M impan d In<cvidcros prtscmM in rM Reqm did nol fadcour a(kr rdntt. Given tM rcmiMers in IM1C mcdis, tns e qobably IM mosl wnabk prnumplion. r Weon~wwwrixlMmmpln<sysxminvolvedher<: AT ~ AT(C, PWA Q ATI-11] Q ~Q(PW,PR.Y.AT,QI-IAPOP.06a.[l(-11] Ar=Ar(4PWA.Q.Ar/-p] Isa) [7 =Q(PW,PR.Y.AT,AT,Q/-II.MP.D6a,Q1-1)]. TM xystcm I5.g) wn bc osW lo g<nenk a wusal oraering d tM prc- dn<.minWvariabksinvoWed.asoulNnnEby FehnIt965{ Whmtwom arubks ax eqviralem in krm d Ihb oNerinB. w< G^sk lin by prcfcning <nogaroas rariabla ro Iagg<E wdogcmus rariabla srd by prcfcning rarublm na inrolviy sM qia dcnvon b tMx thal do. &yoM dul lia arc Imokrn by jodgrnwn u lo rM'd<gr<e drndo- g<nalr' n -_- sma.mWr:.rw.nkaroaen ~.. b Wr m.n.m~.imye.ae~w<na M•..ut w e~wa namc ytd vovma Th<1" smge ryua o M1c c. salnd /or wdr hrm n IK w g lin< w in IM mrixbla ar anRnl i~~ erJercM A«re g w 2leann«sonlanr~ InAT=bo+b.InL+nrlnPWn+hslnATl-I/+bjnPOP (59) +b~In Y+M1e~M+A~InPA t be1nP W+b.InQl- I I +b~e1nQ1-11+6~ ~InL+b~aln P W A+6i slnAT/-11 This eqvalion hu at -oo ma' - b, kw variabka II ha ton meny b<vuxc givm thal ATI-I) is Wa<n1 wc harc only li obxm~ ' on AT for w<h frm. TM1h mw~n thel IM xrms numberM II IhrongM1 IJ musl M droppvl L Ihe r<gnnien's b M1ave poritive degrt<a of rreedom. II also hss too kw, sln¢ x wnnd mwsurc chaMa m rM fimia q.rteqiom or ib <onryefrnorz paniwlary <Mug<s in Ihe <vn- jMUral elaslsily p, whid emcrsa W<Farc IHIk choia but lo live whh fnis probkm. W< procved, az Fentt 11965) auggesbd, m dMw IM nnal Firn- sbge epnatioo rar earA Gmr from sampk infwmalian. TM fmal nlimatn ,rc shown in bbk S12 Figurex m parenMesa are 1-sutisti¢ aM SFE u In< sb.aN cnor of e<rimale Givw IM high dcgrw d<ollmarNy amongtM irWepmdrnt.arabks aM tlx shorlageddcgrendfrceEmy on< fiould rwt try b anatA sl unl signifon« w Ilx nlimaled coeRxkma Ttr :nli.bgarimrm ar iM1< find ralua kom IMx <qna- art dellalW by thc adrenisi,g qi¢ dellala w obben CAHAM, CANRE nc RegxssmglMCA xries on iM CAH xrlnyklwalue dRaquarcd ranging rrom.9)6a (R<ynoWs/ ro.99N 1P. Lorilbrd{ The CAH s<ries hav<orc uery iderwli" propeny; for four aul o11M u<lrma CAN rt eloxlY <orxbl<d wilh toul xha af Ngarc4ea (Cl lhan o CA. (Th<wapoonr ex Amerion aid Phitip Monn./ Rcwux d mn, om m IM nnr cnapr<r Iu.e a hrger eoeR iem for 1<ad n'bbg /Mn do ow ksxsqvara rcgnxions, wmr.ry w IM g<dM wpMalion.nmd incbaqm I aM <. TMrtert Iwopoxibk wpla~urions mr miv Th r is In,l nur mcon of .avanising spwdiµq is ionsly m. cmnpln<for tM cgarHlc i~Mwtry If nc, ronj«lura/ lcrms iMt mfttd oor dixuabn in chapl<r 2 are quix unsbbk. rM rw ni,g uMnlyin8 M(S.9/wi11 Ee imdequab. Similarly, LIM erteaisordengm in produn mu upon Ih< adrenni~g elasticilim M1ave he<n hrge,(5.9) L690 bS6:5
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oyzhnl malwrtllttvzinmlincy.z+nmcriiy ++Jpnuli'v z(Rrc vulJ appcmp(rmm a cnmal inzMcliim of++or czliinaxz J+ul iM1CaadvenninR M cigarcthz vRsh Jxb co m+Mivn. Ilvl zhe gcnerxl d+ar n of ou .uhs nnk/emM1k Jvub~ zm +be ralid'ny of sad+ ancinferc tt. inr naxly.aan IM1e cviJe+ue t fwdufrm.~he.al yain.InlM1e ne mks cqvaliovs adzcnisine vn imluslry sskx an funher liehl on Ihc imrao ofhMUSIry c Rroa mming m zha di¢ussiory n appropriah m Mcs<M a dcmarN cv +e for ngarel s zhal das m rvlve adre sing. Ona +ze I+av<encludei IMt variabic, wc aan evtc+d oor .umpkrba<k xveni yurs. Wn cM1ox zo begin wilh 191>, tinrc any lagg>i ufies Ihm begim 19<4 arM wa avoN tln lransilion from nar to pntt. Wc apttii zmcd wizh a umbv of v modck / I a vcr ihe periad 19<tfit, eM rhe foilo.in8 Nualion wxi our bcsl <si!malc; IMCTVi ^! IOp +)2N tn1Y1- Jt561MrW/ 1611 (.5866) (-IUCI) 1~9610/ 2.186 J.081 -J281 +'N96 tMCTry-1/) - 46505 Md 41133) (DfiB>) J.11"I . 61117 ork. mggal lighl vf zhoc nsidcra art rickingbur corrclazion duc lo rradocer adveni.ong dtcizioov Ahq Ibnc s zhc pxulur lag slrodux implieE Accmding /o zhs e advenixing has ro dke on nkz onztl a yor afza A1zn lihs inihal incubazion period, tbe MimaKd mnn Hg ebk;inmotlehLll.i.IVaMLVI,tbecvaJfdem . llhelaggeddependon nabkne ezaMc.Tl.em onMhelm Jilf h to beheve zM ssm meRCknz ul a+mM advenidng. naliy, Ibcrt s thc probkm M mll'mcarilY Wc Mr<rm a0 mm rvu+liomon only Iwche obxrvatiov-a vny.matl vmpk ihex dau ro rrue eRM aM ro mcame e1rM. Wert we to befrcss omtyur m thry zlaw( wa wovH bc forcei lo ao+Klude lhal Rrt eonsumpion w aigaral~ ir a rpnp onry w dgarna ad.-anmns m..itt. a ma sitt of IM umpk aM+z6c gmeraly zrrndy danner of zhe nr®bkz, ' B590 656[S R' a9I22 IJW = /.)JO SEF.-91991 All weRCienh eacep IM1e ro aignifwm al IX ard rle n signif nl N 5% S nz¢ ths cpvalion 9hibizs signd M ia aM ixome coeRicimry 2 ossU forzMr dovd a+1hc rnulb shovn ehove MxoNinB zo zhex enimazn, eigaxzla arc prla arM inconse G+elazlk in zbe short~r+m, IMOgh m zhe by rvn bolh eluzkizie. are eppro.imatety unn~ Ths in zul impact of z6e 1961 gepM mms zo hav<rMord zle marksr by aboul6.J% whik m zb<Img rvn N shouk lown pcr wpiU eonmmplian by abom ZO % These rnimalw an xem quireunvble. An auanprx /o uu tbe adafi9e reled pricc rR, inslud W pW raRed. The eocRrnu wa: gsrcrany Wsihre. Ths rtiprorwd ow hlief IhM IM1C poor wvnage af (he 9{S inda yrior zo 1- esunlien/ viliales il.
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- h x o<ed<geao/IreedwneMMFwitM1mw andM1SdegresMs(.eedom wn abovclJd.Txel singlM1ettappro I m<nrMm<ah d ro serul <u.rdsuon si b<¢q e~mlr vd. 'M1Thexm Irikin8 oh ne aboul Ilnc olhv caclraicn is Mw litlk Ih< mulunmus <nimalion p M1u aimd !M1<m The main <Aangc n S mal m< m<ae 1- .rc a bx anwl<r. Th< <o<rt.;<nu ef mmm< a Hm omD<ulirc aar«liaing ar<san imignir nc aea an m< eqa.iom.< 8 raiud aMv<0li boW. Tnc Durbin-Walson's arc suspisiousH bw; w< F u-is mas Ihq iMicau m P«ir® a. reeems cke< mMORh<u mo<h u bc 8 if bYsaPP/Ying'shu ~imalron pr M to. Ia W moada etta m m~a ~, mMm<adrc e6<wu- <ammleemuxkszsaaln n<orlmroa B~ r~.~r airt<r<m r<em m in< si from kh ~oli8h~, 9JSg, t.56Z /165 aM !b)8. Thx Ma n8s Dmvidp ~~ sfmlh<povioonlM1a~induslryadr<nmnBinllu<nadindvslrY d maea N<xt orc d our meinui~ hypmn<ses mue nc cxaminM We na.e Y umW o, ah our eslimals Ihvs ru IM1+S <xxD! DossibH for th<inur- ' ttla u x sne ume <e<Rwmn M1<M fa aB fvmr We we uA We ssumpxanuingoarprdcrrdrymliomTabk6.31s1ww<rhlemLL . M<slimalieglxesepualiomror<a<M1fmns<qnltlYTx<Dramulian . :vat<.aMlnalwhhoaHlwaw<on.<rswuomxkaBamm<~e~ . aindirn gniriana kr<h ukm on by tle wcirident vlumin . M<zelagsar notshowmaslh<YwouMoBas6emnrcmlol- . w< Pr<s<nl In<s< mimala mainH bwux !b< nypolhuis dur w< M ' : ntt ryoa~ion Iw S fm au firns s dsirivdy rcj<chd Th<.ilm af Fwi~nbarMJ6degresNfr«domrangf<omB.NU8.85-eBsign: K a Bnm a~ mucn b<Ita Inan oM M1aB d erc pnant TTe riMiq p aB !h<mor<impmsiv<wnm x roeaB tha~mlh«uumDlion IhalaBahv <o<I(xi<nu w<rt m< santt kr .h rrma w<coula nw r<jar .! ws s'/. . ~ W I<ra !h< nYDOlx<sis mu !Ir iourapu dirtv<d. 'ro<a< <.nimars arc s<ncnlH wn< enanr~ on. na.arizin6 ad. - rm'muwilhlMriBnlsigiaMSiBei( nlaPD<w<onHmin<upusiom fw P. lorillaN aM Philip Mwxis. In !he BM d theqlhe adan!'emg :. M mmpniters 'n rro! signif et Tx< Mgaritlun d in<ome evd We ' d ' ~~ rt ._ se UggMd<pcikcrnranabkworkonlYnrx<axiafPhilWMas Brown @ Willamson, and ftcymldsaM Philip Mortix rpp«tlvAY. . % ...~~n I•. 1190 656?S
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51111 o665 ~.. Ixv.t ~~w ' oylaJwoass~lo8ws~ya.pe wt W e 8w>!IUnPe sl! ol ylryv Rlleatewaxk ve uuU alp+v$a Rue p qes w.1e4. an8ae ol uopax siyl w allnl v vayt'RPwwlnuus We RNe>w'loa w p nuasvJ^wl me~p eal~ swuy>p uai~ wl lalmpsuu>mvopnlyu.v aw wW +J~ Yulz§euel>a w.U ye Ywyl.a.pv a. tv41 w»> swD swory JywJ m1 We awY .o} aw41 ~ sa lo w.flup z>.v3o Jo uunJwn u> lvlu uo wya smi 8wvxa.p~, IveAca lem 8uyn98ns nuap!na u Duq > s'op }> s~ xr3>v Rliw oD .T4t XZV §4w mu4s m >41. uuiueuo ayuu n>Ix:w wu.lwv.llpRx„vvJ,NSSa Isy>SI ~s>yy. v>In xue.unury awyl,>enu ,!ali Inl4onp wml llc P wW ~leu ~ew,ii .. mn®wv,w,l!x,JVryaBU!s!uanWwlPwwws~wyto9vl>oe+J!u&,e , mu v, aryn,+es m>puadaD paeYel wl 1- 1-y 9u!4snlnp al!nb e, mtwyaroaumu odp,uBSWeaUeBauoylwlaw!y>41vqw&!sn aapeyms!tadwwx!puesuuUv4lmisrvaiyw ue)w8!cW4>M : epyasuy nJ wauule wI V! a LZ'g §qe+wo+l Suey> Ia Rluo wj PL9 aPM sn W 1uauW ase ntewnm t/gJ 0 wl ~.e e.ep awl mwqoa .cq No su!od moP V y8no4t'8wq+ws~P Rl+ano lou n ay~'nqeya spll m.GlnmelWOS D>+>+pP mu aety a n yGyl We bSlp .-.ax4S.9 >AYSNIwIMm4pamJq+lew'pcW+J-ssouWmH!aw q[.9( w~lsa+m oi §qeon sz. pa(o1Jwa wwBOW ulnJww a41 '.ea.! PooB v aney ol Rlaryil ve pe +e>R pon8vmyuuJwouwam4lmewysaawtwo+/sw>xn'>Iwimesv Rn°^W! wi a Vo ui pa!Peqwa U! ayl P P~ seyl a erpu oivunaenoaalaullsoJ ayl suiuyfao> p ssn 41W -+q w!re8w au.a mueuenoa wl p ua+as ewsxm..pe >n~rel>+ ypm yxo aun alew~w 13NI WI uayn auleeau a.>m >..y We'paFOlJwa ux§Uax Z18J0 ayl u>ym a. va>UJ ' ayl p us 9uls!uanpe alotosye eu!sp .aavevi+ena w+~avsnu> a+~Jwal e^> wl alewnsa ot pwn >+a. U'9 §4e1 w umo4s sua!leoba wl woy - pamdum> qenrys.. a41'w+J 4>va 1ul y 1111 1>paw p mlewxsa .w lu Rwau~ya wl xeauu! ol qwaxe ue u! sa+enM Ise§ aeels>vyi lu ~' 8mrvelSNlwlWeanMU4oa11Z9611+,mu11>ZWROiJw>ax-yivw.i W ewaP R.ISnWi xalbu 8uuuas.UU! w Yu!s!uv.pe R+isnpw ax»ee!a lu s>ua..bnya y1 mJ ao>Wa au ay.w.J vtew!tsa aw~'>.ule8w u p Rlalvuw Z. aoryn:%ulleweaJw&smleu .>wV+olw eu~WUJSa.+oaayy e5 n m mq la^>I %01 wt le w>e+Jwen We asx~ u 8ws~l+> W ~'laenqv 8wniosm alew~ya jJSlO wl m 8wpuoJSwoa wns wl Yu+oyy d!1!4odnj ryMVUOS 11 s4'>I ns>+eJUI wy-J 1w1 wl 4. D!D am VeVws sp~~m a,IBe~. aloya e.(+ISnpw ayl ley~ sRIJw~ sel> pP:w mol a4~ p isallews >'LL I>n JwB~s Ilel s la wt'PaaPul -I>•>I wv.>J .m ~ >y~(•„<P~,>~YuA~s We a~>iLaua 3ci. n/pvu>yllu .~ ryclliarl ,/ isupw .fluo WJ *flWf*>ll ^+M muapJev.wlf anl Ir>I nl .......... .9. x w nl.ua+ wll Rlul. ~uv>nt
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vrJ wdl. I M1 for a1uko.TlxR r¢M I,r,^PEII or111arUnJ or n/l f~ems m4u„ogeJier l + rh Fetler g Sp hnwtt f. h 4l&rc . er limc fnr <h f.m inJivNnally I,nc n,h<ss Iha~ Inc xu ' M+FSIe X 6 aM 59 degr<es of rreedom rcx')0] for heOLSpes andJNf«rnelNSfrss sPafh.rcsignYCa xt tn< zf% I<v<L Tn< r«rnponains chi-aquartosuthfkt wnX 6 a<grar o( frcMOm ar< 19.55 aM 19.15, bmn signifcam al IXe }% kv<I. This raites a very urinw issa< If IXC uxonsfraind v<rsion M mohl 5.11 's lo give markct snarn fhal sam lo om, tne mtrktions wc hate r<)r<~<a on ~n< Da.ix nr.ampl< mformalinn m„rl nola. Tn< onH 6e mal mm<I i. isal•<irm. «irmism ortf«nm<r morln<6axi<unu marka an. c - mnat,w< r~~a n or m< <n ,ain<a . moddx a. Xcrorc ncel onh <mdm tn<<r -Ia For mrda s.l, tn< Iw l~aunslia witn 11 a,d X d<qers d 6eeQOm msponding w Ilx comfraints IXa1 D. aM br Xaw IFe ume value for allrfrrms aM rnK Ine som of ag oodf ients De sro wcrt 2e3 for OIgQ aN 2111a INSf. BMn mtl tof rcjenion M tne <onatraims K tX< 31% csl. Smilerly, ~M corrtrpo.ding F-sulufis wilX a aM (O dcgrtts of rr<cvlom for Ihe constrained v<rsion af model S.II wn< J.N aM J.10. Tnc(rsf gnifica I%Ilrcttcondel5% Fm modd 51141Xclwo FxIKMio wnh WaM <Bdegrcc IXherdom rc 1.6fi aM I 615. Only IXC Gm 's aignifiunf et 10% Dm bolh art dor lo th crilical vallw or 1.635. Givm fnc mwtiAanorY co<IfxieM <s produ«d by fXn model our failum fo Grmh rejat the ssary cansttaintx nere n an era<dinBH wuk dtlen& f« Ihe linear markcl snarc approach. finally, tne F-atKefio wilX 11 aM 51 degres of IreMan f« madd S IV w<rc 2,23 Kd 230 Ban Mtnez wn<.ignifiam ee tne 5% kvd On ba4ntt, thm, IMx tats ®II fm rryafbn dtM a priori rweemry n Ihe co< cients. Mort eRM<M lau of tXne nypotn<s's wooN nwlve esfimauw, of In<moa<ls conaknN nac mbjm fo Oe raassry rzs usi,y fhc df i<m mnhud of Pow<p (1969F Hfaim, ra without tne co wutl bc compufM o<ing 2<Iln<rs l1963/tt¢hnqm" aM Inetw b tuled by a veabk madif lion oI tne Irn propomd by Z<Mw~A simiW 1<A wuN 6e p~ncJ m Ine IN 11, <ITciem ofinm~nr weuM r<aemFk su,Ekus mila.ly, n oold hc ahk to Inke, n,ne ard e p hcs. M OIStj mW INST <s a i, na dlyatt lary to ougM1 Ine Irn,XY coml, Imnsrpo4ea tm uchamorc <R icnl rri<d wr aDnw snnwet mal <onetaima mal usf noM ittne sum nf th< pr<dkl<tl markN shara's to <qual unily al all limea w<re rcjald by sampi< inrormalion. TA's <slabliln<d IXeI lin<ar markct snart modc6 otrn<ann cvamin<d in fne stttion wcrt,wl n eppropriafe sq<if tion lu Ihc ciearclrc indoalrYTXcx r<suhs runXn auggcu mat ximaar talx anoua be applied in olhv inv<stiga- ' wim nnvr m.r <r n.r< mne<IS.a. m<aro nf d,« ,ng In<:un abilifY or ucF spaifmat s. sz rnenrr.yn<awneMOedg Su baxic mod<h ol i,Munry dcmaM, mgg<xIM by tbc studics mcntioncd m ncI,on 0, wm «sfimaled: l.r. CTP =lp+D, Y+byADV+baCTP(-1)+a L11. CTP =Do+D,Y+brADV+baADV(-II+Il+v LI II. In(CTF) ~ Do+b, ni(YI+brIMADV )+D,IMCTFf- I/l+a r.IV. IMCTP) - be+b,IMY/+ba1MADV1+DsIMADV(-I)l+u +D,IMCTP(-I))+n CTP a 6o+6,Y+brb(ADV)+baCT%-l/+v r.Vl. DTP =ba+b,Y+brIMADV/+6a1MADV(-11/+6.CTfl-1) Tbc nofatian uttd'n giv<n m ubI<s SA aM S.S. n«q far fhc variable ADV ud n. The Iafta q n DNOrt, a mrmanydAlllLmcd XomoxM- wenmd ADV-CAPrm haC~kestimafeBaNin dx. ofn<rs veru ADV - RCAT. Tnat it w«mploy bnb absolum ci8artlt< advenising qn'potmtlal smokN eM Ihe ratb of eigaMf<adverBsing oul rulional adwtisfn8. Oz wouW cap<cf Ihe W~fn ro 6< m«< approyrwfc In grncral; 3 ah advntixrs doubk th<ir ouflays, thct< is -- IMII la Geqbr,aar nM/' .IV IuIM ua H].lill lu,le ,eM1,romaThr.eenuurt.y,r<FM+r.M,InemK qum 0590 b56.5
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a,...r..n.........,..n . ~: v~:~nene.e.es...a I6 _.^._.._^^._......_.. ~e :..582R8%^^...._... i .._...:_~..........._. R~~ _....~._^...^...~.__ - ~~ ~ ii
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<mMOya/ p«.iw. anrn„ e,c aIW ,~,nl a. r«n.al.. wa,uwn,: f1.CP%% - F 11. Cp%% +M1,y+h,ADV%Xt1,,ADVO%X+b.CP%% 1-Il+a a+b, Y+b,ADVXX+b,ADVXX/-1/ +b.ADVOXX+bsADVOX%1-I/+beCPXx(-I) 1 F 111. IMCP%XI = a+b,IM Y1+b,IMADV%XI+bsIMADVOJIX) y~' +b.MICP%%hDl+u .'(. fIV.In(CPX%)=ofF,IMYI+brIMADVXX1+b,IMADVXXI-I)) ~ ? tbclMADVO%XI+hsIMADVOX%1-1)1+ ~- _+M1sIMCPXX(-Ix+ $u Y.V. CPX% = L,IMADVXXI+bsIMADVO%X) aS,CP%XI-1)fu i vf CPXX u+b,Y+brM(ADVXX/+bsIMADVXX(-D) +b.IMADVOXX/+b,IMADVOXXI-Ix . _ +h,CPx%I-pt,. Fefore, u s an As , aml all Ih olncr naalion csaq for ADV givcn crmr krm ,in labks 5 E and 5.5. these equatiow arc frn enimasd for all Grms eombi,rod fm Ihe penotl 1956fi1, fm a Iaal or il obttsvalbna For Mxtna atimales vm ~ xl ADV = CAPXX, absolure rral edvenising aM fm rM1e olna Imx .: ADV = RCAxX rakr.e advemm~g eom firm: nan ana ~ ompnilive advenising apMar in a0 e4vatiom; lhe 4mTliw's wlMha . Ihry shouW bc exprcsttd in absoluk krnu or rclali.e 1o rhe advMirieB doucbyallindustria '- - As m IAa lau sMmn, all equaliom wert rvn wilF aM withan Ihe .. riabk 06i. Wc aho emptor.tl Ine Iwo rcMlive pris xrks, PR aM PW.IThcrc kgarirhms w<re uxil m modeN FIII aM FIV.1 An addilianal cxpcriment was lo imMde Ine lag8cd als of competi . on [CPO%%1-II or IMCPOXx(-D/} Ovr inilial rcasonilg wn War rusd adva sing by e,ry o„e 6m, slwuN dra wa1 from comperilors, ard ahc mos cwtomcrs 1. compNilion hes. thr , morawin~pancaawar.x:nwldxnola4lnoapl,IrolMx,em~ m,dn. mn.inr. a ia ,«s,m u.l. n,a laaeal „an nl rnmlwlhnra ,I..Ixa IxgFnl marke shar<. I~innllY. ~I,e markn ucmMtnaindiaclhal. sika. w.,lrm r.11nx i~tM1C c,mpany dcm:mA c9 eli .nsnovW b: dm « x~lc r cul r, we would caMn Inc imeraM lor ReYnolh In b: signifra mly I:ng<r IM1an Ihe u imefsM for Liggnl A Myera Tn Ic9 Inis prapmixon, wiln aM wilhom fw dummy vafubks; DAM, DrtEDLMS DPL nd DPM. The cowtanl, q Inus msamref tFe iMm aM tnr Ilrnw, & Williamsan, antl Ihc bummy variahls meazmM dirtercnca Mwan Ihc inlmttMs dIM olhcr Grms and thal of R A W. An M.n maw modir rimu brougM IM Ima1 numM af eyualiom io bc mlimaled to E88 (=fi x i x 2. ) x 1. 21, 98 ror ncF model gins all or wr prcvious eapnims had bttn IM1m OLSQ aM INSt remlta wc deudM lo cnimate all IFae aring anly OLSQ al Rnrc~io sonomvs on camlimer lime Wc Inen cxminald ckarly ucsuful ryualiom eM rcestimakd IM1e r<n wilF INST. unfanunatdy or unfonunarNr, ax bM 32 or IM1CZ <qualions coaM bc <IiminalM qvik 9ukkly. As m IM1e lasl unbrb no pr:z krms wcrc signifxam m any M Ine six meddx eM ,wne wcrc dos rnougM1 lo gnifcanac ro luuiry eilnef Prcunu/ion or rceuimalion or any e9ua- nvolving rdali.c prisa Alm az befos thc rcklisc wnak.u4 prim trtrformed a bh hlkf Inan IM rclax scriu Ovl ot96 rcgrcaioiu nvolvin6 r<lativc bnolasek Mis. 85 M1ad wgarive Mis cocRKicnl wnik onh 35 of tna eqvalion wi1F rclail pris show,d negalive Pris dtenx Norc N IM1e mgNive mcP~cients M1ad r~nalislia bebw -I 5; vur rrn wert below -L0. Evm mnsidering thoa eywliom wilh pris lemu mods6 F h F.11, F.V ark F.YI covM be Nimhwlad bwuse IM1ey hed rw sigMllom advMZnBmaR 4nh wilh tne riBM sign. ln Ihe 96e9vsriom cslinatcd tor modelr F.1 aM F.V, ,w ad.enisir,g variabk nad an aasocuted wnos abmlurc azlue wss grwl r tWn one. Pnv wne larger 1 Wn om MlSaud Ine slgmaf tFe mclfrc4nu varied. Clurry no puryqae wouk be ¢rvd by dceli, whh rhea ryuariom MrlFer. WM1Cn lagged adverl'smg vanabks w<rc insarted, m modNS F.II eM FVI. Ihc rtmlls wtte morc mmpkz TM cslf ienl of ADVXx wes gcmtaxy pwilirc ard nevm aignif n%whik 11. melf iml of ADV%% /-nwasgmarNynagalirtardossaion,lhaignir M.Tbecaelfirxnl of ADVOxx was elso mnaxr na8afice WI never sig~ifmm, wnik Ihe c«1f iem ot ADVOXx(-D was atwrys posisve aM freyumlly aigni- 6599 SS6?5
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ADVERTISING AND ECONOMIC PERFORMANCE >1 In,radunlon . Emnomi9s hevc bttn imnes,d ror somc time m IM1C rdation dadvtt. sin& os ol sdlinR <vpcndimr<s in gcmrat to ~hc abilily d 6rmt sr ~ indm nopoly nrofi ,z '' Ths cav'rt wam,na avaihbk cvWmwlortnc< cedsucba mnip. Sation 13 dcels w,itM1 tt nal diecd nsn of thc advmlun8-monopny . rclatiansM1ip In rncu tena <raa.-uctim dan e usnd m amme Wa .. rrdmiun bc,wnn aducrssine imcmur „w prorrcbiury. w coZaons 13 and )s <aplou thc Iheoraiwt nwdun oLand cmpmN -% evMe„os ror,,wo mecnanis,m firough.nicM1 an iMnrtrys adv<nizbg " miBM aR<m in moftability. FinallY, udion ] 5 conwins a summary d our resulra aM mv<Iw . a.gu<,M1<rc ~haL despi~c ~hs volum<dwriting m tbe snEjla, .; almox no~M1ing s k,mwn abom ~nc impatl d advmisi~ on Ihc abtltlr ,'- of(rmsorindusnies,owmmonopolyprofltv ' A bmic poim wc wis m matr rs ~M1ar anY mwMism tMOngM1 whkh n iMUStry's adver1isis,g auBmcns 1. opponuniry lo wm mompoly '' pror,: mna~ ttrrc a arm wrri<rs w wvr.' . ~,enq~r,vn.,nm,'re~enuiy'aMVen.aevpmexw aaMnswhb.. Usr..r~an. ~n..i.e¢ n~imau e. tw~ a, moeeh aw u,tr.e:v ' m.w,wrs,mc..m.,aerm d.w,"ira{ vk ea aa awY.'~;: ,es.qeaaaeu 661mn d w K mv,rn'dwas m wau usMS rouvy, " suaman.,,m.m~..vw.o..ercaae.w,eeednwd q,bm n iMos,ry aJ.e s M1ea nu8h m . dKm . n,<r .. Ir ln. r ae.< oogM1 mPgaa rons ~dinN ro vnder wnn i<lser tlvca p mrl .w".nr :a <nn,"pa„a. I mc :em< maa m ,klrci a„d m,c. thox ,rads wh<u nigM1nadvmsing gun mca hiBh of,. n dcmentary priu tM1COry, wc kam lnat pmsisnm supn-nomsl pm(n can 1c <vplainM an1Y by barriers so m,ry. I( advcsising nelps -ry barsi<n ,M1rn 1, wn b: b<k in some mcnv,e rcponsibk !wcaav moGtx On tne o,ner wM ir ~M1e kvd d.dw,isi,y lus o cRen on cnlry basltt; a annm be bhm<d fw monopo119c pMOr -ad rertem8 ^ tMr' a sYmptom of impNnd mtry aM high psof tA naThiswmgummi s timilsr to tnat applied in tne uswl monopol'slk <on,pc~ition modct Consider grarery asars m pr<aupcnrurkm dnya Lms wvc di/krm4ate4 by loa~ion raW<r tnan advenising, bm L produd diRnmtiasiw wcrc a Buanmte d profn; w wvN havc obscrvnl morwpolY profs m Ihc rmaJ Brasry induslry. In gmeral vn dM nok d courtt, sinw rntry mto mop markNS wss quNe nsy. In anY mark<t In«mry atts lodrin prdrs do.n ro sh<wmpc! ire 1<v<LlfnwfrmnM1arerqabsolulccoMdisadvantagrisd-v6wlablishd proeuc<rs md 'd thc minlmnm df km srm abe u amau rauen to ,hc rekvam markck persislml mnnoplr prdin nnnol h<nmrd. The 's nd lo wy dut adewtising unM be vnd In wpbi~ prc isting mtry basiens Th< uwal argumem k tnat edvenisinH inrv- bso frma,o wms natml frcm theh wmpctiton' adionv Thp s bNd nnkchmsiaroragroupdfttmtlomaaiml<jointprcf byrtisln6 prke Thm Wrertisiy's nJ ro cnnann dc Aabiliry d idomul wslnl nrThe u dnrly e diR h pln,somcnon to ob.scrvc O.< mvm mwaun th<eddifmnal innncn¢dadv<nisineon pwms ahc tns dircd innnmw tM1rough<han8ir,g mtrr barricrs u ukm inloarceuntt~ ecku, tnnv8h that ( tba firms in an mdusrry an insulasad from <ad, oihcr, lhey am doubty iruulatnd Gan anr potmlial newcomcn That i; B adv<nish,g v.mura ~rwsnam yr.M~w~y ZL90 656:5
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51954 C691 g a~ WaJJe ul uanl8 _ sayl ~poq 8wpnrlsv w pxn wnYl vnupuaJra - 1 :( mua. "„519961010961 ww~;Ip~Jw vow W^ P/.81 wwn %91/0961 M pf61 wo+l mavyap~no ~em HP.JU ~ pqwVa o Yw 9v!,aJ cyl ,ano %IZ aw, :opw axd 9eealv9n NL %i6 P~aw~ wiqlap dN'J xil m4s WuaJ e Y961 0l Of61 aw+l %ti H~ aaea bwlVp alesa,ah aiLL ve..uw ansiwspe A.la~lnq nMJw. e,aeaS IeVI p(~1 0' v/lw) mF wro N~ aqi salupui waac mVL paa+mw wey le4t epaw 8uowe 8u:puaJS w Cpye ayl p ual. w'vmrow i9vuan~ aww e vexlJe ww~ap ayL 'wpaw Impro.9 a4~ lo ~w!Il::u..axl.lzoa M ul wll»p Le4e ryl .t9 Wsnn e A61 awlW tlel PJw nl'W61 u: umlpaw yaea w, WVaw alJwa lo nqwnu aVl n:.aF 4an u: eu:lea:IJnp :v, {onlon oa ryl s.. IeVl x xu 8us a.0e p yyse pVau. Ui61 e N waa .*Pla~o~pu: Wwe aql. 'wlepap pwr Ww WdJ 8ms:ua.pe leuo~leu rywan.a xla s+~aWs 1 V a14w lo aBnJ Iwi xil
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wwe4>m.vaw ~w,+..nmrw~w.zwa.lw.. mf+w+xvw>wv^^zw!,4v++9Wwri ~0 4.wz 4=a w., wf ~mu a w. uor~w~ao. n nwwr.ulma al~ •u.zw Lvw.e..:w.m ,vpe;uuq Rue u suqlenq.yl fos meuw wu sanp aldwes «oyu:g a8wva uo Naws a9 oz We ve 8qpuads leuqz!pDe p n La leu9+ew ayl'Y.w.M H!nay q>anW+d w Ww9 e uNm MIV'awF q+wF v:vl H9wapsuo> 4en Rew eu!z!vazpe s,uuN Rue p wu>u,zvL> a:ll ~!q wBWuna 8us~u>.pe wos'Jp RM pu op zfa>.W W auws se IsN :NUwdqa.>p Wa fp,eva+ yYm RBOI.ue ue % Hmwm vayl {e296H uVanM R4'vuePq mJ qan8n ~wq svV se •e%dwoa v!nE q alv pue 8ws!vwpe ua>..wq J:Vwonelw ayl ze4s z! uo4auqdva Ha>I4 vow tl s%a pv 8upuxls 8us!uanpe mmzaq swea n.> drysuaselv %qess u++ 1e41 WnB+a v418C1'CCI 1f61) Wwn4S.(dnoyr 9u4wddv Wu u u4y ISUOne+y uaa9 a.ey pue ve zw+J vfwe8u a4s ze4z We vlw auo(uv wJl• lou mp Hn,f a!uvanpe leyl % boywepv> wp a{y ysBwpuJ s+lawouo>a+no m!ro pqwuoaa, aq z?YI uw rwH .'a8uuya w^W+d 4yro 8uole uodea.x>n!u,friwoa e se eu!sn,anpe xn RVeqa We Rp.n4>uvanDv Ra41'xlel v>n s4^sv m4zP. ¢e ~pe sw,J vive9!~ uoW d:pyd+oJ RI~+P Wu!elqo wam z4nsa+ %9wx'Rp+wWx w) 4>ea +ol Wfodwoa waro cferu!IZa u>ym fnq W p a4f m pNyns wn nl M N 4 Y oJ(4 a4 P+ f H >ap am sw+1 IenpwW. >4 Ea Y>9 , gpaJJ 4 II +emallaRueDe4u 1 ry 8unoa.pasw+J's>I>®' -P p 8u!v Den W.Pi ~PwWSemqyl-al9 J. , ~ u4fop u f pvaylseexwouqsw,Jlnryn~pqpwivsay 8u!s!I+anpe p vvJw! we yu&s Rue WJ ui al9eun uana wm a. W° •wJl> 8wwuvpe R+ISnW~ ue wJ vuJJns Fuv W!I ~ P!0 xw au ul ~padsz: uvWJe>mF9Dxn uo!snln ue R19WoW sem zl>Ww xe4s uA,ew ayf u: rylvl>P Teewe.Pc m. >yl ze41 YuVSaeBns JwYs +ol,w enEaayfl v>ll~LiSS e.nPuBsu wnPzV361-IZw1,aViWV9uu a.peanluWe: me1Yuu >nDu mu4 ^ evuJ:ai wapurJapLla3tei~a ~IaJlvualuca9:u3u'eP~'I aw. .I +uua.~J ffqxwn. +ula4sV-+aP V aJllau.. 51954 06?G .lep v,o+J wonenW qg[ pzew!,sa a,y, 9u!.!v>.zDe uuq We ~ISnpu! . Npa>Ipwswx(lynvl,yPe>qww> w,9yae>pwezlo .I>.%mqmqe ayl meMn w wu8!xaD s+m!ww>w%we.> wW >M _ 'L99S61 nl vfew!lo>4f uo N:wp+aylwJ pn +!4L YI91-0> :%9w+n Rwwnp V961-fsoJ a4r W e awow~'v>pw xud •%evW4ro a41,o1 z'w>bywa w Pu8!s De41em L9'GV61 Dq+ad a4f ol . D%PJwv>n8uwlaw~aWewaPeWZUas>apWepalew!Wa..belul .. >T>%>4fM>Ywanwayl:4We8amloma!nu!alqeuuzn+sesr!4ite41 pao8+e au pue'sapm aqW I~efv puyc!19w1 xiz ue4f +v~aq puw+q+aJ uIWeP!ap>aud%esalo4mv4yvW~+olsw+azese4fW:wJOS1e.M N J uHre p>uzw vod>M s•Iwwa~ uoaB,nS t961 a4f N wedw~ ayz wnone qfy aAV m peu8!z.p %qeuw Rwwnp e suo!lenba,no p Iw.v u/ uln> aap 8ms: a.pe pxu osales Jo m ayz s+>Iiw m lp;l >,ow 4a+.u sex +fiuuoJ am avux xuu leafanayl wflew q!wenE >azzel N1 8ws:va.zpe leuoneu Iwof af »nPe anve8u p We+aVl ue4z +vz>q yw+m+~ la.aye We SI p~>8e _ aou>duOwellop0961w,Dxsa+dr>lau!s!fn.pev,veY!aloawqun>wl asqe>yz Yax> Ile Isaye w h4, sem 4nw+ 8u!w:u:Llez+P +>4wutl Weu+ap 4rcnpu: uo Nall> Fue pe4 ews!funpe 4zsopw ,e41 apnl>u^a ol sn volP m wa! Les zou wm swns x>4f Jo awe>:pu&s aV, 1fnueflow+. us%9wd ayf We'Hue>uyloavlnw Jo a.8ap 11 'F Vsela 8ws4 '+wP~e R+ISnpq~lV wl y, Jo vrs a'z'Wnlon a rs>Yel +wln~ ~~+dW P LJa4 8 tl' . R J. .,^ JI 4 W 4 I Po 'I . PaBY ry papqwi P P wee v. 8u yanPe s•+eaR lu > ry, Fiuo u>4M '>19euen wapuadap .~ PuYY%>41.tqWP!.wdseeumod4meuelJnayzloXin9'ayf:wanenba y Nf P Fuv w w Pu&s wu aaazu>:>}ww awoam We v+J wze/ary " aum qlnsv>yl fM'4anw pwl.a ~ou wP>m suone.+as9o CI Rluo uan:9 su W Wewap F+fsnpw IL DwvwVS> myl aM . pauadv'!4eu .npwuVf+ e>J:a>Jss~ ml>puw veyspa+e auyayfseYlf%ISae3nss4Jlu H!aWwesloszey ayl uu {ulvfw Riansn>P a+am pwn s.(e...le o+r4s f>A,ew Iuw~Pa+J Jo wns a4f aAUw m ic+w~x u~:e+:su.:~ y+efiu.~1'J'w+4 wu Fluo p R+muy vl~ Inu:nlJVa Flu~~we/vius lap~:w >4l +nos rywnl sllw'v wf'qrv~~n!.!Pw ~w,y>yf o~ ron~lJ:::e. wq:uana n~4 ,w. eavm wa
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Lnskr mp:m m,lty.dia bu:N:u~iri Oi SO c. •• i:,N v n N n el ,vc ouq R m'fik<IM1:•MTIA<r rnhtem <1dir of II M1ni mpk. ~s onkno nnhckcAl o~r purrnzn ar FYMIM1CS sl bo1M1 uls M s if Iluy wcrc mn.imumlikcliFOOd. ThcnctM argumcn6 unteJ in uclion l) sugg<sl we M F aM <M1i-.cq,are Inuro cs fiown in nbk 65 witA Ih< mh<a Wc do thtt, ke<pine in mindmM1m n<nh<r tesl s caacr vra IAm bolh art likelyro <ct IM nuN hyMrh<sis morc otlm tNn IM choun si8nif na kvel mplin. A p , g enlty empioy IM1C 5% kvel oI signibca wbar rou w.. o ~ unconnrainaa vc ns of models 5.1, SIII aM SIV un be doppdimmeASUlyfromtMCOmpailionbrbmspecifi®AOnb<war, onM above, Ihe eoerapoMing Nnmestt eslimela w<tt mnl! oMOdc'IS 5.11 a:M S IV ArRcr from maa<h S) arN 5.111, r<spatively, oMy by vi u< or IM wnslmlm WI IM intaccpr mrms sum to ssro. Comrarin IM conslrain<d versiom d51 aM 511. tb<Fsntislie with m165 d<guea d rrnAom au l69lor OLSQ aM ) 5g rm /NSf. 9aF ' e significam al rM 10% hvd hus nM st 5% Th mggests aroppiug Ih<mnslnin<d.asionnfs.l.amggcadnnwhiarr«<i.vmnMrw<iglu , wMn ir is ,wl<d rhat IF< muonslrain<d vcrsion d S. ii, which M1v [M umb<r ol <slimazed p rz hu a bwer sum d squard r<.iduals. Thoa we r<j<n 5.1 n:d~am IM comrnim IMf tM aum d , rh<inuraMsnz<roforlhcKOyckkgaalribulion. _ Compving 5.111 and S IV, r bdh wirF mou gcnm86 l ia8 asrxture5lh< wilhlarM M degrttsd rreWOm an 6.fmOiSQaMGfb " IorINST~BaIh art signifnM ar 5% so we drap S.IV in 4vor orS.i14 r<jaling tM constraim IMI tM sum d tM marapts equeh iao for r.7. gmttal In slructure MskaymrorweM r<sf involvs vomperi~ nc~ comtn1mil.N rain<a v<r.ions of madd 5'.11. TM F-slez'szia wiU 1 eM 63 degrtc d frcNOm art 1.13 for OLSQ aM 46/ for INSf, and 1he . mrrnp<wding di-squan slaliszks wiN or:e degsz d fr<Nom ere 4.13 aM I96 pV fom rab rtj<n Ihc nup Fypolhess <e 1 uI1M 5% kvd , aM IM1m csll rm droppirg zhe wrzstnilwd vezslon d 5.11 m lavordrhz raincd.pecirxalion. u TMSmoaNS whi A have nm y<I hem ciiminal<a art rM <mernima , mo:Ml .~.Iil mn N m:d<i .f. g:Fex Iwo JirrlyllFC /~nurlelke wirM1rl tnn nlof Iaedum,coreesM•nJine la IM nul/ Ayrml:a's Ilm, rM .JJiAmired cneR. s In ann nrn adl any <.pan:,mry I:nw<r ar< Isx fnr a.sp nU 1'6y Im IN51'. Only IM M1rsl d nuu i. sienifcem al 10:;. TM Iwo ~' fiForcd<grad frcedam aul9EfmOW aM i?hrnalNSrrM wil rrar a ar s%rM .«ona ony al lo%. notd m scctionl.Je1M chi-squart sal's probably IM mort busWagainsltMnughypnlM1nisand.a.wercmarkMabovclMCOdfi- azc moe<ISluan <whalimrl.oaiucw< nIM m:/1 M1yyoshesv M Ihoa adop IFCSUr:<onnrained vers,on d modc1511 m pmknMaapmir lion. aa6ia epueson Aas mra main r<alurq an d wAia w<re 1<nd eiwve. Th<firsr is rM Ing arunuu, wFkh v d IM simpk gmmctric ar Koyh roem wilh e m<an lagde.t6years for IM OLSQ arimaraaM J 99 ywn aording la IM INSF fgoeev This m<am rM1al M1atl IM adjuslmem in markn shau lo a meinnined ch- in ndvenising shart occnrs wnM1n ).II yean according lo OLSQ, or 3.10 ywn aaorairy la INSt. TM imWn d advenising n tong.liv<d 'm tACU olimala bul iwl wr pnTix ~M r<amn's diminisnly rcmrru ro aaverrsi,g m tM amx uad nAove; 6 frm A buys Iwia as muA adv<nizing az fmm B, a will M1avc, in <quilib.imn aM on av<rage n markd shert <QUaI Io on% 13]<Iimn firm 6a slar<.' Finally, our prtferrN equalion embodim rlrc eaWraim that zM mm of shc girmi iukap t<rms <quil aera TFa< cnNfxti<ms tMn apm ad, firml wmzurlv< aavenuga w aisaev.nugc fh.r .n um ulribuzahk to rnrrenl Wvmluir,g or psst uka arTabk6.6ilwwsrMrenlvlws sacukdwitLlMaiRCrcnzshelvicen tM various int<rrepls'ar bolh tM OLSQ ard INSf cstimetn d onr pr<l<rrad spxlGmtion Frem Ih's ubk h appws zFn g<ynoWs haz e signifrom advenzag<vis-l-v's zM ozFa fvmi aM higg<H Q Mycn hes e signif m diudvenlag<. Rmeriran uems lo haec an advamage ova ell ahcr frcms caapl g<yrwld. whik Ihc imcrc<prs fm tM osMr thra frms arc <s:<:nulty inaoang,:,ahabl< rM <srmav imMy rAaf A, rM ;n.q:. e u Ima.. 8690 656?S
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51954 0676 e~ J 4Vm ns'u'W+nseaw moV ullew ou •qy -ye1JOW x4~ swaa s^y~ y.i uoltqv.wxop 6!.Iq eqevv alqePe.e e+eP P xJ.(1 ylo9 WI4m +ol cx8v8Be /.qsvW! Ww9 ml qep W p alw u41o We u,&ew p uosuNwm,:IZL2 4•y6S51) uwsvd We su!II^J P 8w,p^J Ia,+Wwa ayl ^o !{v o•+O'd yyu sasu oqe wnwPalw ayl 1ey14nsv ryl x.9 dZq (s'U ~a 8u!F!Jql^w'7 w SnJmo Iruc(4J ol W.%a+as. vmxe^L sa4l x4l xqna4sol RIyWn ~wJp v^sww e w sxae u^ ro[ynpa w wwv a^ v!D^x voµ 'd 4p^ saw a!w p aHex>aW e se JwJ INI cessys (YLI snyy 9wsu +v W oi w»us uu 8u!VS,u!w!pP ~uw aVl w veWO ynw uuJ a41 ue4+ml a9 a sey~ a, ~ P.mwnew e+q uayp4o> »p+oPUOVs ayl }uelwua a ny leyl wuys W[so a+1'pa6o!Jm wc LCU ~a vw» aq uo vlec lo aequ sr yp+d 'd 4 asy .Gsnan9oe11 a11'71d Nbd-21J1'/qt4Y511Y611 uolsvd pue willo~tq Dxn unseawLl!i!9q ~W wl •G,el!w!S snux9o a x^sv w+ Vas^ e'Jnn - JI •vnseaw . wa'! 11'd wsu Lyiuam a Nx4a uzxu sn p osle•(DS pelu wle^s a41'Wes +¢II^P ol 8uis~anPe +FI^P p,a,le.ua4l *asu UIs.uW m4m Fpea1J LcU see/'eL^'uo enWUw wpeus anpea 1 uayl u a a,N sxayiali.y u uy,e , W e u41u F uaqay~s yyp-su u> e ro'puewaPP<n>,seu!>eu W w e iI 4s x~uyva,l A nl !rnW pu leu, ,u u,u.BuW m,ql^1 xy. .n,!.,Lyyeu oyiw.(Ilvn a~laryu s14. 1^ wlw§~~Vi."Z. y v.'saluspatlvw»,Wx.uui w qaBWq BuwN.spe rvryuvaD <Ileuua8 asuursnq ieyi we>!pu! vPws P Lx!aen Y N uoa aq osir IPm?Irs +rylop el 9wal+anpe . +qloP P alw IawWOeayl t^wsuoa v e^E as4~ asa4~ ll '^_ We o sxpsisela om~ ayl (q iusWS x'8m,a!uwpep mwnpwya w/? »nq P+!4s a9L'P nrnrsep rynxwfuoa a4t L9 Wwxvdv t+omwww p ro!.e4a9 Wuwra ay~ vr .Pomv ayy "61^JOUwuP vsBaP ay+p vose>w s uoul 1, W»xvJv .YWxu w*~-so!W a4s c v+J a41 s8u!91 a»y+uo spuaJaPUlw+eIWP o~ .. `tm,~,ua^Pe+elloD p ul~w law!Wo a4i iN~ .e>f> v, n/['U ba wwi w a4~ a>ua»Gn '4oq: FPkilw.641'ualwluwaL,DxnpoWrolFpu^ualJOawesa4i ."pm wopvawm wal +oue4a9 awl~a4i vel sw+u Iuvay,P om~ 11 Wi>'Wra .,owwwo> w^^nr 8u!yn Tuewap p 4x!xqa 8u!qlnnpe pu ayi y u ssnuen0 ayj >npeu mWie! oa a4. ^ apis puey-ly8„s'ay~ Pue ~4aJw wuu! W1aaJ.a ayl i m 8mye1 anPe »u11!un ~e Iq waqr %b^o+q aq %nox IIIwJ ol ui,o!qDW a4~ q IZ'U'6a p ~,aps We4'WI a41 ~8ettaw wo .(9 8wsuu.pe sn sxv.w, n y.ollo/ .guqsdrauugaytum~elleivay~a~ea!pm~l'annen!+aplunxNUwe w+a~ ayy uo,lenuvall,D IeiueJ vwipw s~duxqns an4. !! (Yp/YP) ayl w o'Y w paJSV ynm b p p,axels ays se n auJap A!sssexlWxWral lw^paf„w ayl ae ~ Pue'C w aaJSa, 4nm dp tp4+u/=e au4.w w(Z'U i» wum-w ue> an t.9a81e aP^I e uUY'Y o~ u>adsv ypm bJ (CLI 1=I P+d+'DIIOJ-d/ :q!pW uw wl uon!puo ,elq^ e^ba w8nraw8uu Po+paJSa.Wm/1Gliupano ,aPwr)>y~e, S (1'<I '1Y-[IJ'Y'YID]_J-f.l'y'VIdJ~II q>/ym tJO+d v,wis.w ~~ x,n Y aso,y> •u+i ,w0/e>,J.<,>yi .(41e"iv/ ^w14ou1 a{I vayy'x^WW np lu ser^v n iui>^PU.J p w,»9i aq /Dl>
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mabla an digoPOly lo Izlur «Mdl barrien m wtry. rc mosl M1arc Ilz eRalofra zharr T%<rc aM1an ougM1 wM1icb adve sing can z barsi nl lo wlry. Thc frshrk IM1rou~ in sing murMCb xok m'adrttlisin8 Nal iz NrovgM1 tbe «isl<rcs of a nnge of oatpuu w%c2 adrer sing's arginai NfM on mis ising arM tbe marginal cM o( adding to sala via advenai~ s Nm falling Thc cRM of a rsnge of sing muws 1o adrMising's csadiy like l%aI Nincrcuing mmm '- sak in produn .' TM svk a wM1rcM1 cnlry must Iakc plao: is Nmred,.M an emnM canna pd PossHablr wesk imo t%c marke a rew mc Ha mun fao: Nc ibilily Nat %u mlry wip d'nrvp ttinBPricbeWlzmvECO~mmisdzakarc,musvakdtwotypa: pwnury eM twM1nob&®t BoN art trmzd m sslion >.). ~?P, Smion 14 namina Nc dvrabililY d prNCrcne3 created py adres- . "ng Errn if Ilzr< a~e wnnam rcwm. lo zak in pomaioe if V. ' lisi eR dpn advnnising ling<r, a ncw bnn wouN bc at a disWVenlagc rclaliv<lo u~ cnabiisM1d pradvar. A pwemial cMrant mun overwme .M1M abwbte u disWvaMage liis b pr u A o( ' snles wov%I h higber, M leazl for a tima.° AI Nc wmspual lcvd dz appwcF takm by tbk cMpa's wme' ' v onal. Mosl d'xcossion n tbb ar® take pwduq dilfen mNe raruSk relawd lo iMUnry perfomzwc Thna m n1 work, mndurt ailferc vwcaed wiN adrertLmg' nsity.' Ir Prodvn dttcrentiedon refen to rvo.vepriz ehnieliet Ilz enonasan is by no mum obrievv t( ~ Ilc mba bsm. Ne tc.m refen M1e drMirems d adrM g, Ne a a gwealy- n drepa ;~ad.meing ertativmen 'v oNy ' . orz ac mnmaM of ad.enisin8 outlaya Sin¢ edvcrtisirq's Ilz cillw of Nn Dkw in any uss aM sins h e tbe obumbk eM wellde6nd niluaa Nert's littk rued for IM1e wnap MDrodna dilkrenfulbn our d'scv . . 'n It 's rery ®ry to eM enalysn by aying tbat npiNl markN art .. n eepumM1r. iy nn upWnm.MVimpnlmien .nn.wmpian .e a~ . nnolq eEVnINar4 nyq~lareze"W.~wsWmmrt>zmmeirteren~'ns el'xCavmuqwBw~: ~mlrtrrM nM mov anY faa M1i<b in ms ih nAso ssaryfnr rylM1ere sabarr Mry.l enNSM1is awa%r.mMo>'m. as a<w cn, am I mamm ~: n m wna fo/lowv° t.I Dlmn iesu 1f ad+<ni.ing aRCd someM1ow to mneaz zllc conantro ion. I%c Poznlul cRCn on profils wookl h clur. Hma e good dnl af cRorl %ss b:m devae5lo tntin8 fm sYStematicexwcie/ioM Mwern adwniz in8 intrns%Y ana iMvstfY wnantralion.° Telxr (19(d) fouM ro aignif nt corzlalion bctwr,m sdrMUilg as a Peranugc d nka eM /M1a four-Orm wnamnlion mlu m e ampk d<3 Nrtt-0igit rnnumer goods iMUSlsis in Ilva }ura: . 19E1, 1951 aM 195g. Thc largesl wrfehlion cae? f<M was .169. &Iwcm 19a] erN 195g Ncrt wasanegatirewrrclallan bnwem cbanga m t& wnttmrasas min aM cbanga es .dvenlsi~g imenaar. A number of euNOn M1ave cM1alkngd Telzts wndusion.c Bain U9E& p 35% M1as slald NM'... Ibcrt'v iw simPk dirM mrzhtion bnween tbe degrrs of produn dilfaemistian aM ztkr wnwntretion n iMmtry, bm greet pwdnct diRcttntution b cvidmlly oa d eral forca prW'sposilq rowud %'tyf zlkr casmVafnn:~n As Ilda obzrvetian u ndmitsedty bued on 'wud olszrvalbv d numerons ' asd IwYUSUtiwl -tion is etemPfed. %'u diR % to neluetc Bein's wntrntbn. In a aoa-zNion nvdy invdvft N non-0urabk cvmumc 8oods iMnstna us IM1C Unitea Kingdom. Elx (1966) ar8- Net diRVelwv in Ne aamtien -sals ralios m 1951 aM t95a (Net wert ~wl enMai~zd by oie number d prodvcb wkl aM Ne abwtMe kvel M sstel wart rroLtM wi1M1 Ne krck dwnamation ns Ne.arious Uadev 6ut Ir wm urebk to obum sdubk mmavra d vNla wncentmtion for 22 d n's iMurtriei aM M1e did nM altemp to za Ns M1YPOtM1CS'v sutrstireily. emnl nnsa+a smmpwn m S~NM' Dsatr: w.ppnW h ealnnemra.er..nwa Uddtler.a.anen W Brmre.c~ M ..bnss+.,.im CL90 655I5
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W< Fav a^daN modd d o mal adve ving emlaM1 alshow pn n~s< cmr<bl~o^ balxmn .dwc snRin andProfnatilit'y. on,lli4co 4-/1,31isaddalb o^dct<r ning ~a la^ar II us ProfmFilhyl, a modd d iMUSQryaladv< sing aid ryo11V htlhY b obuin<d. Ux of kazt zawra b mtimasc IM1C ProGlnbiliry ' ^i^~gks mal<csi^sa^y<aogc^om<bange. er~bc e/tenive d snt oliBONIYZ Pria poliry aM raiw . muhip onofsheCom s bxrve aM si8ni5um me2cieM a prion o p a l adve gin ryror nIM16 nArryva ezdM ai ~ s .~ irW<pu~dc^ ublo d<siymd rcxPlainW bY - aaPCqs of i.dustry sl wip ba m Im e^~ .py{ by .a.<rli:ins m <van wM1<w aa.. iaing a oa n« aie b rY: n:iry. n er mm~~mnry pnv,<r. um I Iv6t, p, a3)1 Pettm an empiriral ar8umrnt h IM1ry+z ie as blbwx: <avsa/i~Ynwl:i< a~Mw enWw ..:.^enw rca:MMMxa wca~zeAenm.~on... am M wR^ TM1is is nd panicu/arly persvaive. Advertising u wrrebted wilh ~u TMir noa-union r<graziom saoam tm o^ly haY nr Ihe varia4a in Pro6z ra r,g iMustrics aM withaW advcnismg tM1C olbe vari>b~mwo Idalmonawiny<aP6a,~wnaa~dlbav.iam~af iel.mp'(o xemderl.`uwdQ«mraw<rma.aav..f~mnm~leknWw(r:. ~ M ra a~ le ap ^~~ a.I., ~ ~ ~. m ~ a a . e . s. ~ , r ah xwa ,,. poanw • ~,.m~ hr~~e ~k e.a aamaMrn. rmm,°aMn~l. e.a r a z x ..•i. ue : i»- m a avwmmwen npp.re 1mr m. - - nc~rc e nmM1inR i^ t~ir P>per b rcruzc iM inlmpr<iairo^ d~>I induswrcs wbicM1M1avebigbPrdnsforrpso^snmcapturWby'M1eo'IserindePendem nablu M1ave IM1crcby M1igM1 optimal aM nM1z<rved adverln: g-ulo rmpn IM1<basis ^f ovr a^alY.it we <a^ wnslmct an int<rpr<ta~ian oftbe resulu IM1aI yieks 9uite diR<r<M cen<Iuziom tban tb< uaditio s'1 ntcrPrn n. SupPoz zb adrtr sinH tloa m dir¢Ylr i^Iluma Profmbilizy;,tbe truc<oArrcicm ^radvertisiag in zbc Pmbbbi. lity cYV>tim Is uro. Tbrn our m^dd d opzimal adv<nitiig sp<adliq prcdicn a mrr<lation btlwem prafimbilitY eM advertism8 immsitY, dmusstiw'sfrompra madv<nsir~g, vlllxdi- 6 Similarly. J conanlmtion >Rxzs pof bility, we wuN upxt > signifmm mnelvlion bnw<en eoncentrelion aM adveni+M~g mlmaNy. But Ihc irdcpmdml variabk's mnmstnlbn mm ~dvmlemg inl<miry. Snu xikr wmsmrnuon e ody mx d mam rkm® (hat arteC inavnri<: rrirc pnrK;<c tn< moda dimawd .novc wovM pr<dia a dmer ansa:utio^ bcswmn adven'si~g im<^siy aM pra,mbilily tWn bclw<m advttdsirg inmmiq md conccno-ation TM1e's paitly wM hss b<m fou,d o, ercm-mlion szudiea. rn<m arc mm tw <ur<m< ;marmnarinw <yaanY ronammt wim .<wus: aa.anki~ ox.ws monopolr..ad monoPM tta.dv<niain& miz n nm lh<ais. d mu attYion ro.rRV< Wet adverlising doa M nionopdy powr. BazM, w base as<mpsl zo alww thal mpkwrtcWims asA singk<qsation regrtvids Prov'nk ~w<vi&xc m Ib's poim. qxs advcrt'vin6 spmd'ug u adrwwlalgd ro bc eMqw ury avaouabk medd d iWustry bdmviw, Ibe u.drzioW imeryrnatian dlhccross-xnlon reaul0 mus bc rteaam'vxd Funha, rmwnabk madd d advcnisi^g apcMi" iMi®ta P~"bM'r s avmculW with adacrciain6 immsity cvm wbm advMising lw m wenauanr ai.e.i..r~:m<sw..~U•~u n. R'~u. reamsw~a a w^r^aw~e~'.wr~a~. a. ti Rinxwaaa,.arosclaa.na.a•^..a.da:mw~me:.wly.alanu.n I In NU meb Is tab a^m aa mimsu d x: d.rN. swc nr.cMa nnh <nnoae~.l nu nrr.: w~aabe c ux b., ax .n e awsb s~rarmNs unwrue..e~aa:. LL90 55615
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nnlin sbeaban IaJverriiag~nindv rywrue+urc W Mrtorr onlY iv sm Y uMenakm nnmework." w:drmnumultanrnu ............ evidrn r IM Proposilion +IVI adrcrtbi~ esldce um <Rcie me indus n. l[ 41 nven d o maave isirrg spendirg hava ug<Rca sakva nBabY<subtiah<dfirms tF< s<ak v wni<A eRw'rnr urtrysmust take Plao; aM tnereny add b ba~<rs lo cmry. . < nm mn mrr rroan.<einn aro +imc.mrin ,main mat att<moi~ m adv<nisms a^~ wc mm mm m kssdirca <vidmtt. Finalty~w<s0 uml rne pni easans ka mppming that Jim nisning re adv< ninBarv a Mrva .e pnen +lnsranarysis w<mn<mJ<snal aav<nnin6 has nrot c<cr seown w.lfw' +n<rclaliv<PSafiraMtitY of dilfer<n+frm szes. or Y Papcr, Sligkr 1195g1 <aaminN Int relalwnshq 6etwe® advcr+ising as a Mrtcnmgc of sab aN +nc avarag<ain d firrm in p urirrg inJUnricx IVe fovM Inat <omumv goods iWv.qr'n advarisnJ almosi foor rimn as much m productt goods iMmtrin n+agc M saln It?]"; .asus .5]':4 law rhn wi+Fin nA grovp man rrma adurnisal asgbny morc M1eaviy mm Iar6< r,rm. s Simon aM Cmin 11966/ umd Iwcraal Rcv<nv< Sarvia daY rw IUD iadusuin for l9 a tne ev.uma d«onomis Nz®k m edvn- xin6 Tlrry m mlalnf +le advc sing-sala af IM1e va daa wiiM1in ~nmvidaa inda, wiro IM1ewm~e .nin a~ ar.o s~or nch na.x Anwl hax+x <orrdaliom w<rt pwilim am n.x negallv<; tne mnrrz af bMr seu af <orrc6+iom wert smatl rtWia W mcir sundaN d<viannm. An nsmiralion d rnangn hnwaa ad'pwm n classa snowcd th< vmc leck W petta¢ ARm a numba d Mha ' ondvsi.i tcss> Simon aMCnin 11966.p <2/summariW tnarsWy~ as ny staling'il k rhe aotnors aVinim that advantsiry; ratc dala abne , n.rs:. for Y g ml inv qigarion o1 m esMf WJi~nnrr119fi91 ar mpial a .f1:W ca sin6 <rv ics IX s<alc <IiN ~n IRS d+mnFxs mtt gnods indu trYis for rM1<Rr»d 193f5], as in Ihalr mrnn pap<z`r m 29 d IM1ar industriez tlrcy wcr<abk lo nltmele minlmum q( i<nl 1 aM frm sizci usip pronl aM sala dau by sirz <ISU Fm tF<se niMstr ca, tnry 6osd a suasn<aNy aigmfrcam avocwion FNwrm IM1e m of +he ratio d Ihe mmimum M~ciem finn sin as a rrswion oflhe mul mahn aM tnc produd of Inc logarilFms ortM1<adreniilng- io aM of rhe minimum el(ciml plan+ sia n a fmnron of IFs aal markc~ irom +ns thcy mxludrd Ihn tFC mort imrnsi.c adver sing is, tho Iarga lh minimum <Ifciem firm nla+i.e lo rFe mmimum c'Incknlplanl. - A numnn deritinsrm ®n b<made W ths enalysix In Ine M1rs+plea. n of minimum <Ifincw n m+.iu an bawt on r<g.miom wtth y<ighl dcgmo dfr«dom.ln+wclvc ovt of th <t miginat irdustrin oiFC rtgrnsioo< iMink +nat proflabiliry dttlinn slodilY wi+n ais; Comaror asM W itwn Nop tM.a induwzin Gom consid<ra+ion in Bvc ot Ine M irdustrim rcmi- in Ihc fnal malysk minimnm ellhiml plaw sis's estlnwlW to be 6rg<r tnan tM1C mmimum eRrckat Grm sos. tn<suwre Ercm dln<ntimamd minimom nr«km cmr sh<n«<d. -mat<d vatw es nine dthe 29 induslris In Teheri(1969a, p. IZ2) Pnrsr.lheir mimae mun be <oas6lcr<d •prenri~ Evnn wttn+he addilim da aronsuw aMadummy variabk lo aaouM (m regional markeu in ronae indusuin, Comana asN W ilso+s'e pnkmd «geuron hx an Rz donh ~l. Wnm adjust<d rm degren dfreNOm, mi: rgan bawmn.n. Tn<<aPlanatorr Powa dmi: w~wtion ia aw mpm Finally. n u d wmc innm+ to ss Mw mucn d Ihs eqwUOn' meagv eaptanatory powv ro n from tne adverlising variabk Com aM witim prcscm qvil< damning cvid<ns on Ih's pdm. A.cgnssim was run in wnieh the logari+hm d tne aduenisingsaks ro aM Ihe bgeri+nm or Ihe ra+io d minlmum <Rm'am phw siu b Ihe markw wert xpann indepcndcm veriabin 1J<nhm M1ad a sigMb caeRcicnt aM thc Rz alw rcll shon d signifvmc Stmitar rcgrcc sron wart rw wi1Mw frs+ ukirg+M1C logarilhnn dthc depmdml aM BL9C 656T5
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u-/^I E!. wM1Crc Ar./-A~ am) n}:r I(U+) thal ic ! 0 1M1C daslicily d 1he itM1 fir s eRCnive advenising wi0 resFat 1n s adve.lising messagev lu signinan¢ s az a mnsv¢ d ,uak in ma+ta sMrc <cnniavlMnuwM1Crcl~d=<r«auiaMiaMrmaukrck nr aa•.ni:i^g. 'm<n u 1M1< maeke abart d rm~ o¢ e K 1im<, roe mark<lrnar<orr.mlwn.aia<asrlosnnwlwt _ . Thus J e u ku lhen oM, f~+n orc mun speM m^rc 1M1an twi¢ wnu fm+ woslundsi order indoubkl6ela11 markelsM1UCV s eWsliciry s geeala lnan oam,lh<¢ art inermsin remrm 1 m.rka rc, aM nrm a¢ neW .w1 doubk 6nn two's spenAng i^ mdc b iaanobkl markusnan aino h ailrmull m con«i.e d a sitwYnn'v~ wnia~ 11c iMurtry chi1F s 8rcater 1M1an one; ttruinly tn's sttms <xlrcmel9 anPo¢ly u zdan IisM1WproaucrExa nin81]64as oknthan ~th<rc wnkM1dagr<attthan xLaM^nly(~s g<a1tt ban o^c^Evmlualty d mos rafi below oM az th fmn goaf, kr rmm ~ is rrYdB'^ Mnc<x rM1«ompalitio~ia lzn wAwnen ann. u snown by 1h< It - 5'1 ,errh aeA n s incfe.nngly 4md riN 1he aim nisning ¢ : mm «1 m< inana wnok, az ano.n y16a IA'/A/ fa<1or. Nonc d tn«slimata nschaqar <w <bapKb fma I greata lnan onc w 1hu argum<m Crovide ro bas'a (w belkvieg m tbe rcc d a n^ec d mereasirg rNUm w sok. <•a <wrw az a fi~m beeoma hrge+ duafne m 16e mvkn'n mor singlY ta 1 th p.obabilitY 1na1 c^mpctit¢a mY rtpoMro rtazdvtt gThsa¢ sarhinsxnliF o advenix a^a mceRSl bwcrs steaadvcnisilg <rzalidtY of Mmand rawd M 16c fim. Eq. (]."/r apparcmlY aads M1k to Iln argammtsfi¢ immeafamlY <Ier wb1 happens 1n 8, 1hc absliciy drbe i1h !mi s demaM wirh mfx<1 m Ue eav¢1iv1g d ils <ompelil¢a. u tncfrmimarkclsnarcrissx ' . h~ va 1ho.e d 1h< 1a.1 nguullhal cn 1MJeim rcsdxakmadvar a nR in ry lairter< aru1. W nnled 1M1a1 J1n:. o.iu<dM1i uudiaz z~a.«<.m- ar6^a 1x nd *been demn r.1td 1M1a11M1C aitto rtdan mMium afrm ~<eahkrecunery aI zalc FinallY( wc indiuld lnmrznert s s~OM 1M1< caisleme o( a rangc m wnidi su¢essire adverlhi^g m<a sagca Inve imr<asir~gelE¢x Tne argurcm nsvA on eqa It ry sd I>.YI aaa<a mu m< r^^ man <v<^maur <nwam<r e¢r^sms rcmr^a m aa.<uiamg our co^nusion is shs ru <.idana cxisd m sugg<.nlbatlhcmin'~mum<m<kmsisdlhcr ei^crusrdMaavas. 1 sing. enM1a in general or ~ Y M1 n'uler industrY i< r.q aac<u.,qbaly S^ (ar in Ihu chaMCr. xe narc ronsidcred punomcre shal rouk h adequasd9 dcxribd M asafc moJala ro disco.ss Ur<fercna aaraMry. M1oacv<r. il is Eelpful ro i^lrodua a dr^amic modd dco^suma a<mmd inrxdaloclu<ida4aemNanisrtmnvdeml Wca~ulp<eaimldMed ' m d a model lrestd by Oeckvlsh (1969A mC nsider vsn 0^av.1ry w embers are null9 smr<NSing A aaverlning m<s.oga a1 a co^51am pri¢ d T each The qunlilY A A <xpectel b rcman constan4 as's sk pria-averag mn dirte¢r[e m. rrc sMS am Ootmlialcnsram knnus sbc Iwg+w WsU<SY or Wuurr sala wiln res~ec~ 1o i^aourr aav<rfnmg e. eonuam, n. Ik ranMr knows 1na1 be <9uilibrium shart d induslry sab routl bc equal ro hs snarc d iMUSSrY adv<niaing 1I wc kt A' nc 1ne rnlnnfs aav<.lisias m<ssage .m d b< b's equrebirnm sakz we b.ve q•eKRUtAr-l p9i rc K s somc povsia< cmwam. wThC Iwlcmur <mram e also assomvl M Lw« thn b'n a<tual seln q. wo^k aaju.a 1o his equaibaum sala attnrai~ 10 dq/a1=Nq'-ql.r>a (tq q• is dnermiml only M adrnliai^g a^av our assumpliorq tlv cons m Y m<asurs Ihc s,cd wilh whiA sate respmd 1o charyn ir Z890 5S6T5
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advntising A, y baoma Iargcr, rtsponx e mort rapid. Ia qc qm~ If q' s wnsiaat q=q'll-<-"1 8vb.nsudM Ibn imo (7.I0k s y bamma infinie, q and V' au alwsyx cqval a al Mve Thc polcmial wlrant in makiy a dttision lo ek n ~nlMmax~m mpreuntdiscounledvalueofhisprofit V=d(m9-A'Tk-°dr. v intaalad r.10) V"Iqn[Nq•nr+1)-A'Tj (7.11) subsiiwtia8 nJ6/ inm mc Hamiimnian yetds H=(C')[rmq'n.+tl-A'T+rmql(r+yrl. (Lg) n the reJevam dicovm nle He mun tnuv WM a mn.ncgNSe rum0an A'0) wMd maxlm&a V subjxt w(l.gA 0.94 and the mitltl condi0on 4=U We now aol.e IM1e maximvation probUn v.ung the . tonb of modcm owimal wnnM lbmn «nidt wcrt appliN to aiadv .. problems in cWpttt Z . Form tM H-povian by intraducing tnc suxiliary variabk A: H< Imq _ A.Tk-" +(Ae ') + Ar r_ yql. rM rrm na~„ry waduion r« a maaimma a v is mn A' a a0 points ot timc ibc firstoMV nxcvry mMitim ror ®. wnsl.amW ma.im'vetion M H is dHldA' = 0, oc yK1(A'+Ar"(A'+aA'1-T ^0, a„a ma:mqadb.dm madnio. i: (A'+AY"'(a-I/IEA+oA')<0. r.l]9 CoMilim (1.13) vill be s.tisfxN ruc eg poiltf.e A ard aon.negaprt A' r.m oah a.: xs m.n oaa.ae ~a m.ka ms.wmp;o,. cli.m thm a s ka Ow one ITi I) signas tM B~ maaimum of H. The olber nezsssry wndilions am d1Jdl®ll•+1/-m, (f.t)) 1imL'"=0. (].in a OJS, coMitiosn R.I)) eN (t.l<) on toN be ansfud if em onh a ~ Compamg (L1n aM ('/.igk rt s cl•wr tIW any ~oia af A' wnich ua H 4kiM9 as wnslanl Jm maximrta V. Thus thc velve of A~gf.m by(1.11) anE ('I.I6) meaunv<e V. Substnutiig (i.16) inw (yJla tolalh diRereatialmg w'i1L rcepe0.lo A. a~M evaluating tM derlrurve al lbc point A' = 0, wc Mrc dA'/dA a A(a - 1/(I < 0. Thm (0r A laegu than Ihc valuc whid, gives'rcm ss lne oytinW A', e9a ().11) aM (1.16) ng for A' ka tM1an ana Sime h12) hoMa eN V ttm whm A' s ano ln's vov(d mmn IIW mvy, whkn mpvirla yoxitrve A', wovN ykH mgativc proC aM, ben<c wuH m1 bc uMMak rt Fqs.11J Hand(9.16)givc A' =U JarA on)y if K A _ s T(•_y) ().191 Thc snaoning n th prowding paragraph n0ebllsna that la larga A mtrY's ~KK p~ubk W ai8 not errna. Noa anppos the sMUnA'e n cquftibdvm ao Q tM vka d the wrtmn produas; c eqvY a KA'. SubstltuH, (nto (1.194 .a na.e tnc savh that mtty s prcvmro! d AT 1 aq'. TMeurrauprodvars.abaaarningpasir prormamdeteringmm' sro~a. AT<I mQ A=mn•+y/ 0.16) at a0panu m t'qae The aM(t.ll)n tum imply 1hatA'vmrtbemvNp[ mu, wnsb implie a conrtam q•. 5imc d"a n uppe bomd m q, (Imtesrt'nficd. (11% Fm f'IC y k's alva)a pwsibk l0r tM cxslrcy ! to compkNh bar enlry ud yn am po.dtive psof in eqailibrinm N s aso cbr tnat evm.hm emry's iwt wmpleteh svid out tM nirtisq rums ha.e a prnfit advansage ovcr an1 p01mW) rntrant. £89C bS6i5
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1- 1 ~t~le~ r.pMhw npmJieum m men maNun, adi EAIaiN br tle ~run Y me~,.. T~e4,nwinBVrzNar< mpbvNl,aonnr,mns9uncr.va, milFOn indias ahownW ucmFk A?: Ivlll Ova <rty fBUr oMainN f thc Sa Y ur <~ur Bvainex ror popvlalion aMClm Ihe imPlmi, dell- fwe8roa ruriorel produ0. ihc bntt waz copini drenlY: IM1e rormtt waa mkm aa IM v,ng d monlnly fgurea BoA uris wcrc checkel ro emurt IFaI IFe crage ot IM1C Qvanerly numbm cqvebd rk givm annval fgurcZ av12/ Qvadaaric inmpvteuon m uset w oMam Br1Y ~^ata of Ih m.n aM audans ralivs In me mnnod a yaadmk runaion ol tinx s fnlW ro rFC aburvalions fm wnmlive rnn ~- r, r, aM Thsfwc euxdrocompuk.vimattttwrFCfourymnms ~ r laar c TM1e a,rcragc or lees rsrimala i: wasl m IM1C annval M1gme m rc,r 0 sinrc ma ,ou ,nd awi.,a mli« s<nmaly b<navd in a Aabk ra.nion il sem,d bcna w imttpolatt Ncx urkx rarM1n Ilan duldiredlYwXhlFCCernsyondinOi,Mios. (3) Tha con rarios wert mvlliplied by IM1e implich dqkta ttrkc b obtah Nearimald9vanaly co9 indei SimilarlY. rneVwrtMYCiravbinda wu nkvlalui by mvlliplYi,g tnc audima nru br nc~ Iropulation Ttc srimala aI rFC 9uanerll CPM mdw we,e eblained 1ry aividirg tIs wa indn by Ile circvlar m audk~ indn. TM1c rcrvlrins r+rmas aert racnlei b enxus rnal Ilc suemgc N nc~ qvar4rry fgmtttyvild rne srnwl CPM irM<uTh's geocmlry involved cnangs orks man n.Bor vns partml. ltc acepiom wcrt apa am a«wnrk lekvdon. Tea inau rm twork Mevislon miabcMrod rhrovBh 1950. and rM1C iMa rm apor Ideveiw dirtued anarylY rrom rle corrcapmdivg tnnvil frgum ror t9}0 and 19s1. The eny appvem wrot (wbirn wu adoptndl was a inlapolale the annvil CPM indlm dirslty for rMU arty y®r. Luckily rnac numbas art,wl loo important, m n-rWt tle rhare artckvision in nallonal advenuing ttpmdirura was only Yl% m 1955. Ivving rixn (rom 23 % in t949 Thcovm0 ad.tttiviigCPM indu zlwwn m r,bk A,2 w,rconvlrunal us'vg 19W wrighrt az wss ib annual wunlerpen in Iabk A.L Th _ __ ,q.gmrou 6/. mrM1 h.,r. . po um e wro.,,e ,Po p e.el yntl.vinM w~im.w ra E690 b56IS
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;wl].21rLvl5with.. ~a clM.mnrtfutua si~'~;c rnfnaM1k n i;n In an iMuslry J<maml fun n, p.ofns w^ill n< Mn ponnt ^til IMyBm~ as M1vih Is R^odwill TM1is rsely wi1M1 1'fM m S Boodwii a tM Iw ~al~har mYln<com wry largtllnc a^ge d s,fwsswhiQi s B lirms sakly c m posil ualilianl].2(p iMimn ma rM grm <r /heppf~ mfk(selea vsproduc srs/MinBeamMm:n<markea^dlh kss ling frms speMron advensing IM mo~e lit<ly entry's a k<pla<c h is d in n tne cnoia d A by IM pres aing t I( we suppo.e hm 1i91s'hoMS for them az wctl as for anY Pol<nlul ry o snow tnal m<quilibrivm IM profhmssim¢ing < Asa1%fies°° AT m mQ ° (rr9 11.11/ son d 1L311 ad 1].Z/p Yi<Ids tM mncluxlo^ IM1aI IM pro(t- zing I<vd dad witl nq prcrt nlry firms adv<~is m nrd<. w blod~~rcw mmpnh6on<rM wuMgy Mln tn< an d limh pricing % immediale: tMrt IM oplimal wnd p.ia may ncei te bc bclow IM proBi-maximrzin pri¢ w oracr to prevem rnlrys° TM abov< dis<vssien v basnt on ~he simpk lag snucmn girm in c4 1> 9A bm il u<ms clmr Inal tM sam<son dresulu Mkl fmofhm Isg w<It As Inng u aav<nisi~ <rtcu durabk brartl prcfe a barrier mry ®n M cr<at<d we n ro tM evidrnv. fo~ tM pro n Inaf advenaN das i^ faa creale stabk paBern mcrloyahy. nfThCSnalural pla¢ m bok far suds rNen¢ e fimcseris danand analysic sina mNerrna dvrabiMy 's an inherenlly dy;xmk pM1mu on Bu4 as sK nav< mcmionatl bcforc m araw e b- llmc No so/N c nclus abom tM1e naN-Iik d inv^9med m sdverlisisg <an be U.aw^ from IM1C exlanl liseeamre. An aB<rnaliv< fo dcmarM analyss h cxamination d fM subilin d marktt shares m various induslriess' TM frn appread~ "s te lack at me xhsolv;< nmxmh. ~d s,aniti,y 1' us l lavril<sky al Bxnh (19M p, I Sn/ mxlua< thal'... mark<I cLareshM1avc Mm slahk in IM cigar<IV' uslrykxallymrsdtM1C1951FWpcriMCx<cplfm195a3]'.Ba<kmao nqs>. r Llal <,amin¢ . numhtt M fnavalrin wiln hean aar<nisme and m^<IVds Ihal YM fep ac rN1Md in IM BM four M1as proved nbe xlipMrY i^ all bul a fcw mark<ti. Tn<rc arc rwo baaic nroble;w wim eQnns d me aml Thc frcn i• ,M1al it is diRCUlt to atta<M1 any absolul< signi( rxc to mmsuro 0 smhilify. Orc wanrs so know how nabk indunrin wnh a Ia d advtt ' r<lairt lo om<r inaearri<a rM a~b aiRmy % ro.f m~ sIa,bility d adv<nisi^g ovrlaya % con.id<r<d. Markcl snara ir cgarzrls ert wl nofiaably mm< tabk IM1an adr<nisi~ sharc; as iclmr fram chaM<rs 5 aM b B adr<nisi^R e ka sfahk fhan sal<a an i adrertisirg aclvally nas somc impaa an comvmn demaM.lMrt ieridms IM1at durabk pan<rm d IoyaBy do exist If• an the olbe• n,m, aal<, ran morc Inan aar<n%inR, ir %amr rn.r aer<rliai~ e«m prt<rcna noTlis nofi^m m~ M mad< mort cmurctt by r<f<rrin6 lo IM moar u. t above l.<I A' M advesrhing sp<Miig by fM frm a<art consk<r i^g A IM spendirK d e11 mhm firms in tM mark<l. eM S IM marke shart d sh finn mmidered. tt S' s its <qoilibrivm mark<s snarr, sm d it e equal io fM frm's snarc d IoW imlvarry aarcnising k's <en i• showthaf US')-II-S')[LU'/-UA)], wn<rc (12: 2AX) - II/XIIdX/dr/ ar%bk X. Fq (].22) lhvs relara permnla8e enanga m cquil brium erkNSnaresmperttnragecnnngsmtkfrmsaMitsmmpet rs' adr<dising lo We nov suppox Ihat eq. 1]9/ dcttriba IM proccs d sdjuslmn fo <quilibrium If in4mlly S= 5', we mn subssim¢ aM oblain usE=XI-A[UA@ whar 6 d inrcreN a nol fM peranug change n mark<s sherc ~/ Idt-nsM sidc d(> 23k nul tM <onslam Y ttqITE11 miBM h^s<A ~ yi<klan mlimaa dY, bul fhs nas n<r<r beendan<B muss MempM1esiz• fbm fb> woua Ma ven crvdc proa.dura sime Yadvttusi^g is innv<nc. by sale tle probkm d simvBanrous equations bias s prcseµ ar IM1e aasomplion S= S' is hkcly nevcr a hoW. 6990 556[<
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Fran 19<S IArough 1953.Ih>Iimstsfma0 fmuvse skmdircctly fran Ils enwel anicls 6y II M WwInM1 en mde9enEem mnsuWm. in Prinnrl let The niwam iwm srt u followr: For IM1< yeem 1956 Nraogb 195A, Prtlimine7 wimms .nc Wm Rom lls foMvieg isuw olPrimei e irtk: Svkvfor Isue 1956 13/31/51 1951 11/26/5g 19. 13/35/59 in 19Q Womfm die0. erd hrt Phae wac uten br 1 C Mer.rtq Jr, mirtenlry .ip Oppmhcims R Co. Me.wcg hgn i~ft npon. A w'M1idr M n.bnA tM1C Wwltm enfnmis rm eerlef yeen Slttling m 1965. Stmd.A& Poor's Indml~ Sm.ry for Tobmo 6egn PuNi.hiq tOLO YS6L5
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0
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vnkis naJJitio xdsalraax r<frcraly Arm winpr~c !w n, nr.i currc<nirai~m u carrela~Wmwiin profl- abiiiywil umel b on a ih mn~mtion Iha~ ~ncrc art s M ttak inaaJr<nisf;ng'sucn tM1N ih< m v< or eo elf niem In~m v iw.<auJ by the neassity io adven s< Wc <ansidcrW amditt mN <aammw ;nira.inanairy rcrrormana dirt<r<nm am w< arguW mN m<b <on<MSmv w<a yu;¢ weak w< nmW tna ~imt. <r a a<m.m Mnc tr;butei lirtk to µ: zrgum<m'u«p w<ak <rM<na f« di~mnisniy r< sok w aarariaing u nss b«n<nargaa (M1a~ aecounh rar«ing iargcear<nim M1ave 1<d io pecuniary ewmmie; but daaikd a1Wia d nawork tey ' n th< m<ainm r« wm<n ~n< air nar< nrrn moxr roni, atl nw . r~pbpox m<,< an<sationa vmNir. wa n«a <.ia<«s ror aimMiaAios r<.ar<i~~;h VeMmr<,annabranaeenwiq mWig~w erh<frryu~rywBhwhzhmm<p<opk posnl fbIM1<cismpal8rt iM1's arBumeM poi«rd io nearly unhnul ai.. nehins r<wrm b mui aav<nisius "uasaga pnr<naaea Wn.a. a~c<d mb<r n< nrirlerN m me~ nd aur anr r. m panr <n <r d;m n;rnins ~< n aevn ia;~ nNNasra ~ ev~tion >aexh;biid the mechanian by wM1id1adverlisin6A abiliry subk panerns or mmume byany wuN a<a barriers b ntry~ Bm iim<ttria nudis M1avr. ntl IiNk b ssg about wh<tha e f adv<nis:y aeu b freeae ta ; arM tM1< onlY otha <vidttis w ~h's poim ha+ studs1 d merka anart Nebiliry. Nox d ~nex adryuatdY awp ow tM1 th stan;/iry d sav<aiskq ou0q; and n<adryuar<ly <vauNed ~h uWraa drw d arlreniv~g kve4 W~ thus rcad n<piiv<wirclusiona Thert's no <vidaxt b sngg<t thai <dv<Nisirg ounays ha.e pttminM som<frmn to vnm bartips b enrry Th< probtnn M m<aauring edv<rtisiyi impaa m the abi6p d Grms w industns re om monopoly p'afk e a atlf h onc So fv . ; aiorg wim manr o0c pmNam ~nra.mg aa.nNSinss drau w no~ nan wtrnd. 9890 6Sbi5 novsgnsirvc cgice muices Top< nadisM~n<im aafndve smgi~ sary n: aaMr aar<-mft wrvya r« y<,tt N wM1;<nr~~rir,.. airt<r. na ar 4 a<mtw to onmin r<ar i„<om<, m a h na<,a.rr ~o den ie.dr~ismg <aandhurcs to nhuln rcar adr<niabyThe app<n- dv aiswsa aM pr<xnts a ut d iMicn dcrcMp<a fm ~ne pnrpnse. Th rationak for ow proadum ningc on sM wrc<ra M an adr<r- sng rn<ssag< TAe definition M a message mua dilr<r aaou media: r rImv<an inau d 1. n~essa gcon al a g M <xb m<diom. A mnug< to m r<krlaion, for insuntt, migM bc «c tn;ny-ucoM com, m<rtiai sem by oro rkw<r. in newspaper; we migM ~eN M o« Ime d adrerl6ing sem bp mc r<adcr. In enY nu, n'n ckar thN ~wo elements art ;nvoivN: Ihc <oA of spa¢ a time n a psrticular medium, eral thc numbc d peop4 wM are <apoxd to ~M1C m<dium We Ihm connrua inaico d ~M1e coa d sdrer~ ' aM d ihe mrrespoiMing cir<u1- « suaierrte TM1C ntu d tne coA iMe. b tAe <ircuMtiw inav 6ivs wAN 's o11ed e cost- per-mdnon «CPM itMee Srxn e CPM iiMea's a gwM apMOSima~ian rxe iMna for advertis;ng mcasg<s. ,oweemmrva cPM indi<v f« magazin<i newaMp<r; bunn<v puM;. wwk rad;a spN rndio, nawark ie on spd r<kviaian aM outdear adverlivag M iM<a r« ioiai advertising k wnsirua<d, xing ISw1 'on 'w N aavttiising eap<na;turs n cafi mndium /u< app<Mi< g) as'we;gnt; M impliex delbi« 's ®kuLtni by d<nN;rg - adven'nin <.pmdibrq ni<gory by ntegory, aM mmparng ran ane ronmm aonar bhi: TA<:.«ri<a art w<ariad .mmany aM yuanMy from t95B IhrougM1 196I' urPnerton.bry~M1e..liaae9r<YmmnVa),.peneu xl:rva~mvmansall
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pnNirvhW in Frimm's Int Irll nrd MMin(scnm (MSA wv w fignrn M1•r rM1C Mn,d 1041 Nn a diuvssM in U< r.M/alr indiar K I9n)~TaM1~k A ~n Wsrnu a lmilws nn d InUCS us d<rVM. Pinally, ss Ihe uz ; nimttW Ianm, fo y N quarsMy fgurl<slfierqunrefrly('pMinditts resM1O mlabkA3. Annwl l„Jir<s' 1- 1- 1916 UrougM1 1959, PI publishM <mt circwlefion md CPM indion rar Ue medu m ional abon frc fhe yeers 1950.5Y 'Ibae umbana indau Figvre for 19d6 art availabk fm a0 med'v <attlx IM a,tl nnwmk s<kvixion The bax yur fm atl IM1es indss wes 1958 Beginnirq m 19(A, dirt<rem xrie wert u 1 fm aome a( th< india; and 1955 wn az IM1c baz y<ar. Rerud fgure fa 195658.<rt nvl pubinhel Int1965, atl xria w<m r<uskd la 19A = IM bw ro oUrr cMnga maUC Th< lan rrpurtN fgxres art fm 106q v PI vase] yvblin. in IM1e rall of i961. I Figu.asfatmfromvnnonsissuesofPlarcasfoibws: Yurz Baul-IW) lau< Dcsigns4nv 19G6 I95p luxg.1956 A /93659 1950 Qlober3p,19s9 P 195960 1955 lanuarylo,196f C 1960.66 1960 fanuary 3),196) D TM1e lasf Iwo xu af figura <an be me<hanirallY <ombinnllo yiN a 1959 inda wiU baa 19bQ TM1<9vcnion thn r<maim's whefha fh 195P5g8 fgurs Bran 1959/ art wmpalibk wnM1 fhe bim m~ Blhey arq Ine C urim mn be um1 la rcbk 1955 to 196Q a,d aP din ]nn on be mahaniuPy wnvcrlcd b a 199 basc. We M1a.e :q rigorous 1<A fm wmpalib"lify TL< 195" figv:a wert of murre prdimimrY, sin¢ fbpq wert pxbliA<E b<fort eP dem fa Ual year wer< in Nonnhek.a; Ury meY b«omparrd wiU Ihe 1959C numb<rv In orda lodo Ui; wcaak tk 1959C numb<n ro 1950= /W Iry maRiplyi:R thcn by 19558/10P. Sma9 dtlf<rtmv am b be npM<1 bw largc dixr<pancin- larg< rda6c lo movcmrnb in fM wrliwNr ind<r -iMiwf<ral dilf<r<n<cs in Ih<two PI urkx Toe.amirc <omqfibiliry NIFe Iwo PI xriea we ua a fhiN mis fa Iy<. rnm.mw I• . 1~ • I E _ 1'n gir nnmmlpa.cmFm ror 10511.I,(. w<avuagu11/xe~Aja«nr Jxnn vrty IVgurn fmiml in I/rc feM1ro:rrY/4661'u<nf MS <a rm <nmpminnnr ri<aa Inr rnnowing r<mo. u. nw rl <nal n,u~a:' wnr,< a nmm~<m nr< n,< rarmarm,dmg 1954 indr. a=raka In 1951/- 1~: l1 M<dium 5<ri<sP119591 S<ri<sCf19611 magar.ina I)< 1)5 ewapapen IC6 li6 businenpublirelionx 159 159 wmk mdio 50 49 spm mdb 99.5 IBI workldevizion ]1E ]IP zpotlekv'sion $]i 5J8 wfdoor 16d t6/ A8 d Ih<aC <rap spN radiw scm: tlox rnough w allow us lo aaxpl Ihe hypolhcsu fLat fhe 1959C fsgxrt's ximplY a rtvkion al Pe 19590 xmbn. Fm spM rMiw how<v<r, Uc irHinrei rtvisian e mwh brgc man fh<avaag«barsga in In<xrirs. To dnl w1U eh6 moSle:w w< wnxbc lh< MS w4 iMa fa .pn radiw aRbargh E ' M ckar hww mud w<igM M giw Ihs attka BoU PI fgora afe kr daylimr spp radio. Prmlers ink presenh en indcx fa :dgMfime spol4 b:n warrs 6 is rKK rcM1abk Mcdiv/swP< e e.plidf, aN fMe "s s avryicion Ihat lhec fievra wmaw wme nigM~iimr xpot On fh< oUC Iur:Q Ur P<opk wlw M<Wrt sh< MS lgure; SuMard Rak@ Dala $crviR lne, make Ihei living by recor6 iry rek ebargee B thzn mphf k arguei fhaf th<'v iMa shouM be bcll<r Iban IM GI ttriev Convcnmg IM1C fbr¢ zerirs ro a 1955 baat we rmd Ik hllowing ttn. Year PI Scries B PI Serin C MS 1955 10p 100 IM 956 94 - 93 195) 96 92 191, 985 9a 1959 99.2 IUJ 95 L690 bS6.5
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= x u..e- a - w ~.ar... •w.erana. 60LO ns6L5
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a<naue I~y IM ~mv,r~ um o. ror .e.< .~nt< <.p<nmw d< <Inpd io p<rWls n yl<N m .r u9~1 enRa e ueun y. rn,nra "t eiax ny rn< num rn<r o/ p<oFl< in me unir<at Srzra a6~ IS xM abovc, trom IM1C 1969 Economs Rcpnrt of rM1< PrtsiACnt obum nr 119EU/ dnll rs g<ign. te nJw i,tlrq pec riol Tabk C.2 prescros IM1Cx usie in IM1C orda in wM1icb nc~y<Anvc becn mmrron<L, for rllc inGividual frms and for all sia rogcrM1Cr. Ciga.rrr<Salrr Figu.<s Thcrt erz rwo mur<c for estimars of tFC numbc N agar<Ila mtl q<u+l of rM1e major producros: Ruain<s Werk ard Prin1<r's IN (naw Mark<rinq/Cnm onsk TAe laucr s cmpbrd for IWO rmm~v Fkst Ils PrimcrsolM IiwmMS amr m cvmmerd mort x<p<V !rom knwkd&abk oUSCV<rx RoU Tclw f 196n n he slvdy d Ihc'nMUetry aM Slandak A Poori InEusrry Smr<fs M1ax ussE Ih<m ScconQ il' mudd u nly lo <mma rLc w, mra o! inmrcY uom r1e rrim<:.rmk anmla Wn„~..MC,m~ooil.,.. :i RM c+e rt~~~ ~e-,;M rzrapr~f u w~a,na ow.. Iwo oemr. Z0L0 556i5
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DATA USED IN CIGARETiE ADYF.RTISING STUDY The appendu dcsvil~ Ihc dau mis cmptoyd n cnalncrs 5 aM 6 wc rm aiscva aa.eni:ing apmang rgure: Thc ~rc.r ttmim rekv w Inc mies rm numben Ncigu" wld Tle miN unim wvrn rrim ,ro wla iaaKn am rn. rowln :<aiw, ai.N- c.lim.ra w eonar e N cigarqres. Fi.lly, we mnsNa Ihe prohkm ef mnsaring Ine naM rcrcauc uma ro wrimale sne degra MmonolwlyThroughoul rns eppendia nc comNa only rh su IargcN cigarNn menvfaclurcrs Advertisiw Dola c urtd AdrcnMng Ag Rgura n our alimata o( IWil ddWr ad.er- Ii.LS eweMimra byuc !rm &ginning u 1951, AEvennirq Age nuvny WblishN a ddailel cumination ur ns a9snding af udi nr Ihe Ivrgeu nalimW Wrcaixn Ths mntainel e.pmdile s Ggwn yudished 6y med: nsde grauy. ra Ine w.xnad•nwsurM media. In vdd'nlon Adrenising Age aUmaud IoW spmaLg hy ndi or Ue fmu m an mMq mwrvrcL aM unmusmel Tna rop 100 nerlonal adscrtisers seie co.ad unti 1966, whrn wverage was eapsMed a nr loy t25. Luckih rna s'¢ large dgarcrx fimn vae n Ile tw IOU Rom 955 on. Th iuus or Ad.enisiig Age Ran whiA fgura far Ib variau ynrsxr tak<nas(olbx: e Ywr lame Yur Issue 1955 9/19/51 1959 gRg/61 1956 g/35/58 196U g/2l/6i 1951 8/31/59 1961 S/Z6/63 1958 8/19/60 1962 8/]6/63 00L0 656t5
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QUARTERLY NATIONqL ADVERTISINC EXPENDITURES The sovrm fa Iheu fgura me Ih: Suriu;nl Apperd"u b RInM 11962k aM corrapoMma wilh DaviE Wilkoraky. an av~romia on rh< ssaHHnc~Cdumb® RroedosrinRSyeumwMreBlank ealwemRloyed. The yrimary murm employed by C05 v~ wnsuuarine hnlh uU or daa au &ran below. MonlMy d qvarlah fgura ert publixhei on e prefiminery base dvroq ud yrx by the primnry somm ra Ihe rarioa medis. Same n Ihe ~ual ywr, annusi lotah art revbed. In W;Ikordjs dels ~~ns Ib< °c~on ivsasi. nn m.am.M+dp.~w yaancrh mun crt obramd by moRiptyir~g Prcliminary puerurly f ra by Ihe ros;e ar rhe reviW wnutl rold ro the sun d Ihe uriyiul pvarMrly figura BUnk's WPa. core+;n8 rlu K*~ 19Mb0, Mtl thh praxdvrt inWe rc beovu d uMd w Produa 4 s nM h;RMy nudmd'mg pecnmber-lanvary morementi. Rlank emptoyed e dilr<rcm wrraiim Proadurc, decribd m rwu 6 on R 18 of he artick involruig moriy vaugca er linkcd'mdias. a RoN ub ar deu wae yvm "vr iMa /oroe whiy~ ne oonrtrled lo doRar rmzh tl mmvel rn4 us~ nc~ r<r;ud 19E0 doUn eu;mera providM by W;IkofSky. Whm rlu two murcei yvensrry a ra r« 195UIrhanlyywrlheyovmlaPP.d/e'artcompsre4thediR Icrmaswert sriRMS- vNhaubemdilr bmrwvnstrvarheeefiaampk vsinR eilher WryrlmeM mdbvd, m's <rldana wu mw.1 w PmnR hnking Ihe L.o ra'ua Wilko&ky agreaE msl rhe a;rterenen aue Ileh rn he yvirc unaa ror mon periada Pw 19Nk.vaaga a sRC Iro uriee P« wnr m.dm tnawapapNa masa.inra buaim~ p.p<rt.,a mlwak 9690 b56L$ xa5
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.rc ame.,c.n aeymlL. P.0raMeFeDe9eeecJMO,mpolY Cnu n,d Morx dau art a.+aabk nrdy r« ®d, fmm ac a M,otc .m a for fls rrmS .arims produq r Tlus..< mna rtly oo rbe finn aar. In MonEy i hMUnriak w aasmak fbe degrs a munopoh m fhe aernmiwnu.y. Figora for gros sais (inaWing eads haa<s/ wem coPkd rmm the s,rm o( Mond11 fa qmerinu geyrwW[ P. LorilhN md )1 mnJ LiggeU & Myers PLiip Morrk ended itt fmral ycsr an M- 19X, aM limu inlttpvhtion a cmployad w convert in figma w a gatrnd~r ydr m.a. Dau an avsfa of goad+ sold. indud'vig Wymmb of.adx nam bm cacludi~'Adminlneaf ife aM Sdfvg 6prnss' wert wmqTd aimdarly (ar fbe five publ'r firma gross peofif. TheAilkeence bnwcn Ibar fwe rgmm is Tnr m~., or gr.m r.orn r~ grnR tt~m n.r,.wtt :m e,iima< w ihr Lantt m rt M ~M1C dcgm of mnmp,ly. TaFk (') sh„w. d,rae az pcraccntags for IXC Ilve ruM1le frms TXe deeez n( m~mory,ry (or'Brown A Wdliamson e mimalad as Ih unweigM1lW arcrag M flu figurea for ~hc otM1tt fiems
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,Im .N I.h Fd,nv„M1eCri¢falbwN ~, rrnart~ r r,icnk Iw,::.4 r I. ~nn. M.,n: a rrl« anmi. m 4vori„g kn8e MiYerz. l1a coml C x M n advc uio8 e.rcM uwnlM1eclafnFingocRen soasadverrlsogmma8ezrlM1em. ulvea 11 u thc conaClua/ frnmework s ka acar. altl wc m,ut Ee vcry c aboul mc Mrinds , voivd. Any diRCrm m Wa ss a s adve augs xs lanniml mmv dscua Ine mie„a a recuniarycaM tclwiy imrurlan m tbs 'Pollo ngudcby Ihe gov shdlProm aM Gambic bY virlwa u six alorlc, weukl be abk ro purchax Wvcrtisiv8 nsidcrebly iwvu Miar Inan Cloroa coukl befort tnck mmge; us lowc Inan muld be obminad by any olnm rrodma d IiqWd blm<M1 TM1e m ctwwk ukvision Ihovgb Prod IkBd lo bc abk ~orrors diuo m srd ukvelm eM magatlm wNl In its pnal dccision ~M1C Fderil irade Comm'ssim.MtaE IISVy mat wim Cldoa now . ran d IM1e Prata Ime fm IM1C same amoeek of mmuy Cloroa srem m nelwork fekviaion advenismg rrbr y tbe at kazl l3~ rc work ulnision advcni.ang mwmba obmincd"' Sa farnaz Ikno <vidas ca whid would se tk an argumem an rec niary aon mim m magazirc W.mkidq nnmrr. em mon b woa nm bcm aoz on laaa;xinn,am makc n airly ckv rM~ IM1e FTC w ro,g m . ancdrsro~ lnury ccaromis d xnk m ukvizim advnlis~g. a~rdtWSlneSUrucnrcmcCOUnwaswm~toa¢eµtM1CFI'CSekgmion Vsing dau for 1965 aM t966, wnm IFe pubiisM1d noe acnadub did snowlM1eeaistmaapuamilYdiscrountaBlaM119d81nasslqemnthe onausively IF aamity ratl fw ruwork tekv®oe adv< sing w mmdr Ifie coa Cn m u pr+ thoumM hann <nchd aN na vary betwem iarge ae4 zmap advplima In feq a$m : Ikrrirtn.ial,arminmraumawmaaamince.snnnaaa.ani~raa .. .pp.6upMtln,emernzln/%lbw,rvl¢snvspemeCwmswdtwMeFlCb ~. s. Prwm.~,ltesgp¢ytS.vR ' n•Qao,MinnYer,vnldivN.p.RV10.FeT -, large udverti.zera "1 zc. tna ImBn ndv zdlin I Ln malro~ni Iiqn4 rmde o,hn Inc Ia,M1IwM1d rrv'~. ,i d,e nclworks cmud la show ny dlsoaum /v"•sibilitia ar~a tne crW rd ive6 Willium LconaN 119691 ,ax disagrcd witn nUnk's enalyxiz bu~ in my judgment Nlank's 11969/ «CIY lo IsonnN carries Inc day. C<krman 119681 conducld an crn mort Muild in.aligalim d ukvizion rricin& Hc dcall Crimarily wiU rne 1960.9 rerlo4 wMn sw,al .ariaiom m ba.c ky«.e:.m,rnu mias eie mm a.ni,m w r~ici~ d limc ow<r rna day was mnsNCrabIY Ics Mibk Ilw witn fM • Na condWd ~M1at'mud W tne dis.wrning wn msa inlcreasmg tnc peaibilisY d Crica oRSdtift vt kan to wmc ic t sns rigidiry m rmes.. :" vcry daaild rtalirtiul enalya'n ol ]9% roMmsa a li om sne IM1 works n 196f aM 19(h ,mihrly kd to the condursbn tM1al'largc bulyers d'd nd rurcMx timc nn mi¢z wbicM1 wcrt kwcr Inan unalkr bu>cra. :•" flPctmmen alm aaamind ard ulavizion nu skoclurn N<rt tbe allrgd discrimination N/avw d larFC boycrs wn mutli smalln tlun m ihemednawork mtaane r~gv«atf>. rcrl.mllne lly~.mcmiwwl above.a' Agam Petaman coxlodd snm the disroonl strunures eaut ing in 196] (~A atalion Irad aM has ux awn nm strruwrd wcrt usel ainty la vary rrim f« limaddirterem value Masl d Inex dixoumr aisarrcardapcr1966. Wc umwt Cosili.Hy ar8oc Inat tM1Crt e absolmay Im dittrimilWiw~ in fava d lerger edvertiurs N tM1C mdia m Rcuniary rtonomin o, suk Bul F dda sam ckar tmm ~o imronant Cauniary uommie m ukvision advenising, wne« tne cnargc nas bem arBmd loudat CerwiainlY nwe ha.e bcm Cresem sins Ine eM d 1966 Panaiµ ortfu swdia a otna medla m a8nossk p9ilion e rcrnara svfat. Thert Mre bem no atumrts to mosnrt tne gmeral incke~ o tecnnkal dronomis dadvenising to deud aiRCmg margiml crtall.e n<rs a a,~aasivc aa.<nisi,y mnaa.gaa R wa.raq tti< nyrwh<a: ma In< mn d.nara.irt mcrsagrs aod nd rn.ngc rma-.~rim acmvd sludia migM eano-ibule somnM1ing io our knowkdge d kchnza 0890 b56t5
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5~ rMadiuslmenrtit an148sorw er n,wmt Isx :JMnR Sr. nlm mne us seo r~Mn~ n exezg I.I s. g l.a l.c. smh.N erann rnmode410&IIJ./Et. N.IH.1A1]J. mndt4lEOlEI. SurgeonGenenRReporml2v.IH,212 r~ ge1 Wrtnisine'vksntb: agtofvbrukt 686 fyutm. nmedby~69t5. pMuv I& nd, 69t2 f5]}]a, ISJ. nHruk31&DLEJ),209.SndaRV~muwakn TobaoTrroim.lE]. usbim]dm..twtM1Va2<2 Tmm~mn mvun. Fee Marter maetv sk.romo41. UniWSUrvTOba¢a.1J0. UWk]Thm.y:5rrelmCunumqionwgmmring WreniYng induad dunga in vua IOI100, IU .eV.n impkarion; S!. VaruiuttovarranamurrzfarLVUrm.rtutLVromdellb0. v, iMenrY dennM. I IJ. wrL.efpsycbopM1yaic.l0}10/. t18,13J. weK.rt imolw„wnad.Ermifi~/g a.9. ZTLO b56'v5
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e ~mm..m .- - m- m.. .- p. ~~:;~;~d ~ ° --,.,ne ,k, ~ M fmn°.~i'ryewl: eb~o,. ./1v69). Ne,wrt,ekrAw pcy: mmmem. i. i.w.e.41/.n): VniveSwaAm.i.AV.,qM°../~ese,iemubt e,p ,am,ee mm°erury er bv..,..ppyl.~[ am.b Vuuy.'v u°i'pi.n.n n.nae.°t W.~MM°n VSO°.a.mmmreMmN W.e. . . ,bm_ F~n°emw~aM.Y/%M~~'brcnw,,.Ma~,.m.em,mirmei 80L0 >S6T5
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SIJBJECT INDEX Slw•u4A,~z~). ~ ' ' ]sX W. Iq.1n, 3 w.yern).A. Ni~xb. i rtn~edrenivng'. n f.m ab modeh ro1/.19J, gY106 E11312. bn~ H.M, pf. w.•uenii v~i~=S , ~e~~r a~m.~a m9a~~g ftz ~g,.Jea 2xv. w.u~N.P.v^Jx~zau,zx~.irz m 3,6 o.owN .artnGin +~ ar..mE .'m~asom: Sr. ~1~ov mddt DL.J;1aFiW.~1x Atlvpin npnz.ziom:5n P.nuLajuslmm~ moael.. es.a.]n. fi.mmaE,i16 Aa.M'vi eum.eunxntxN2x1 anaGP.K~6t wWOnT.A,gxlt.]LLU4IIxWIIb . emgdaismm.ulv: T.dm,w.l,.Ja wdkH.L1]2 (o. aY~nwic mem W ir, iJ. J2. J0.265x w.q))S.IM .¢CY.1,1t,d9.65.1u. Yn.mk e4gapdr, ao4; W, I5; ilt-2d1. Iw~~u~WdY.p x Jx ~oa ~xu,. ~s ixiwn:nxm.v9mxazm znba,A,.xmixmx rm.nxi9digoPwr.Jbx mgeW~iaJ darnuM,2)-1;dS wa x49 ame mMU i.wtiw brpmM1®z, 225. faraipn.W ]M.19 0. 2110. 301MQIJ1-EI;IIS. bMrv429.i5;Ut. Aa.vzGup e.mp, dbtiiguiNN GOm.aw.a:ung.peMing, p21. ]MIS •g®eg.uW,uJ'wyopeMilortxl . sytl'r.+Inurzmm~igJ.t2 ' h mesbm.26Q5. dWn en GN P em9on<nit d9-52 mnumptien aeuM sL59, eb. W.;g95. aXLeRm.S]-N. Apnguian Vim.g2 /.gpeg.uon inmuka ehem moaeN.105-10]. Tnvtl, iMUetryaem.M, JIS. mnrt.n T9Nao G, IP. iplll. J14116JJ; I>9. nt41 nS ISS.~x.. 6169-J'N, 2p5206, IIJ. O:LO 'v56TC wf
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n /nwlK'umuaeluwuwmi'n!aw..~~w•.mY Puvp .. wm.'w~ p pl Yat01/ a'wwa 'ta.x>w wm'awPU ~+wM waw.n v~ vww ~~>a•a+. I•+nwa .pe~a V'/mell w'w» aw•vu.a..w..v....m.a~w KK 1'bxb[ 4 w.q w 1.0 w•~VwwuwwMV^nwanvu.!.u.pv Wt%tl'.'n.w u[ / a+ikv "I'wvi't..~... .vwnuawP.wan rwwmi Ysw11 .'.vao wr-tan.e!.w!Wa ww e.en+..w pwrb Y.NO ~wnnn~v'~w. . x.n.se anrkt'qwww.v. m!wm a,ruwy.pwvm~yualnru.avpu95t®~u.V•P~?W ~OYZ9611'•'.Yaam _ lelWkl udiAN[ . W a,qi:poa.n elwVtsell*wm wqwpww.. .yw wrnm~ pwaw~..aw.n..viYawll'.vaw.mv .ww.pJ Y A N u+w! ®w~~ . v•v~ , m!ttµ~J Y[[a1/ ro'+a+ avk q nw.wna+pYwellvw.m+tv~.[w.v.v~ov.u~.wn~~e.m 51954 0"i"v7 .w~aWww ~w!w~w.wnexsoan':'m[~.n twaun 'W ;~D' P<"~w~4~woew.uwq.5 . w.a'wii M 1 w?nw!a[V P ww••[y.4nwm. aLL Y9i611 a r'xw.. .m~we ~ w PVw w. 9+ww µwnw.n w Y ~5 a4.Yauu p(mVAwN nw'Mw-.wP9w!•WUn[w[Yw1~'(Iatllwv+n~N' ~ x xw. m9awt~ ~a.wwa..•.:.wnnwan.wnn+wvvtnl) . ,v,-t+wrwuw+w!Nqarvewl~.a-.w.a. ^ [a t rH ww.w+asP*uxw+v w•q.. w w. w+n .wvv wP' ~ wsvm.v.•YmA.•x . ~___. . ............_. .. . c:U.wMS'-N - - r~m~w~~ iww~ I .•lk rcWw'.~z ~ .u~yyeal)„.~a'. rolav.nl.- (- [wamm n rnwiM - m9 ry~ Ao e,w+w wmwa Yro6i) w e vw tN[( M['+www( qw.w1 !~ .• wYta/xmu .~. tt Iu~v1[["n?•rs'~ ~Y~wms+uw •Y +ro~a 1•- nl Pmw >'n Pw mia mw!wa<x'/nGS1)'.. [[Iroxt [u.[µ - a Yall'•• -° ~ [ uoi tiw a n .. 1 .» ~ w stt:1'»0)1 um0 a nwow •` uqn+aoYael/urw... w..rvn . a.l wa u... ~ p m uoaaaqwwn ~uaFlnrlet'.~~nuwuw~j~ a'N5b~nM'u nw4'a.M.u. ww a Nwn»e0 YKwI a.u n 1•w
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C Jvrag::.<VUxr~erlY -ie.. emering 1. Mrivd 1969.61. I Frrc mJo~ ncJixA sp kkvis amI n work Ickvn on/ w ning meaivm spm radiv, begaa in t955. ~T/ c priw ry a:hurccs uscd by CNS arc az followa: 1/1 Busin<a i'aM^ - FtrCann-Erickaon <sumalss as givm in Pr1ElrcMagazi:us ovgF 1966,MCCann-Erickson m Primcr i Ink. McGna-Erictavn wm usel kr thc 196] annual eotak hut tbe pvaAerly movemen~s w<rt rakm from comyllaliov dmagrtm< aJvcnsing nvmucdorc by Publiah<ri Inrormalien Burov for IRadi~ nal Adve UI N yaMrs r QVa aM a 1 fgum throv~ 1966 aM i c1962 a l lw tFC McCava-Enckaon as gi.e n Pnn o~al s IaN.ktMfr196> p narly mo me.km trmn Newaprper qdverlisir:g TnM pubYShd by Med'u Rttnrdv Inc. (<I Ovlaaor Medn McCann-bickson < aa girm n Markning/Communi<aliom ard iu pr<CecesaorfPr'int fa twk. I51 N<twork Radio Dau throvgh 196I w<rt ukm fran M<Gno- Erickron <aumals az givm m Yrimcri tnk Qvancrty Figvra a/mc thm m from tm Radio qdrenisi~g Bur<eu aM annuil to4B from McGna-Erirkaon antl FCC aroadual finamial Dala Isl Spm Radio - Tfirov1 1962 quannly figurm w<rt ukm Gom tix Suliaa R-unulirn A.ao<.vion $ina rhea Rad'u Adval¢mg Burcav fgura ha.c been vxa Annvil rouh hare mme fran Md:ann- EricYSm aM FCC &vadca9 Finan<iel pva. /~1 Ndwork T<kvuiw- Through 19fi6.1FC wvr¢ fw Re pvarkdy ss tFC Tekvision Bureav d Adrertiaing ~ala fa 1961 .ve lakm (ram pub/i¢liwu IX 8roadatt Rdv<rriren Reporte qvnW n oMvir~d rram a axa Mdinn-rekson eM FCC Brosdun F nl Dau. (g) gpd T<kvuioa-TM1rovgh 19bQ pvart<rty Bgurawert takm frm~ T<I<riaian Bunur d Advali+ing Ders Sime Ihm,11c mura M1az bra Tckviyion qgc Annuil totak w<rt from MFann-Erkk.wn atimata and FCC &oad<srt Fiwnc+il W n Tabk B.1 Ixeccnu ds annval figvra fm n.<ional advenising upn aimre n Br <ism media TaBI mtional ndverlising s alm aiww0. aa w<n a• 4 wnaum Aonar IM,k Thc imolidl delhbr employd e da<ril v~ aIN<nda A TM1e IsA fttis m Ih's tabk e mnrtBM doEan L690 SS6i5 dnmioaalaav<nimgFTaraim isy<andJm,JOkkr.lMPntmwrion Fgures an lakcn from the 19A91'sonomic RePnn d IM I'residcnl. Tabk 8.2 exFibiu Ite pvan<rly upeaJimre sris for <ad. medivm. AO figum art milliom d cvrtem doRan soso:wily advslM N anaval ¢ Tabk BJ giw tM1< current aM eenslam Jolim laah fn an mNia fm 195M14'I.
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ind.yrtManraeubinaMrovgnif vrcwlsw<rcobininsdW<NUs mnalnd< mgt mi: pnninn ol tA< coman« aM Wa.wn uudY provids iw <vid<mc f« ~h< c.incna d economi<. al scak b adm- ngih suo~d main .wclion d lM1.tr Papcc Comnn« aM WiAan nok icany sisnifwnty gr <rag<mofn r.t<e 1« large erma lA.n man rmn n 1F< ssme<indmo-i<s using the rua ssmpk d 11 . indo.v/<a Thry thm an<mpl to «plen Ihc< d'P ucing rt®«. aiom d tM1e following rorm: PDPa+hInISL/ME57+<[(Ad/S)ln(SN/SL)I, (/,y) "~ em PD's Ihe diRCrcna bnwem th n.an Profn rak dtM 1erge fumm.'~ .Mlhmunwofnmmuftnesmancrrm;stlMESiaheraiodtAe :~ . ia d lhe unaliv group d Nm to Ih wzk da minimmn <I5cim1 . ' IenLtAdr2 e the advenisfng vls ratfo 1« the Indu4ry, aM SH/SL's ~IS.afwdmwn.alsortM1eiargng.oupdra- wmmtuladt8e : malb grovp d Grma Tie interc<µ c n<va signif M Tbe amvod . coeRCkn s vgnifiram whm ~ luge youp's aa Gms abow A1E4 '. aM IM1e slman graup c an Erms bebw tbs aizG wA2 tAC thiN lam• ~'~ rssignif nnywAmcomparioglhlarg<AfourfirmswMatotbm. ~:' above MES and witA an «Aer Grma in th<iMUSUy. WiIA <I iMutnzL no« d tAe rcgrc.eio~s e whitli lAC al'veutcd< ~ ssignd nt<aphinmortthanll%dthvarienampraf nkM, nxc No ngr<aiom cmploymg diRCr<m fuminnai fo<nn am pn -.v.m<d gul lhc mort l<i~ poim 's IM1aI thcm's wey ro dnc<misc IAC:mpnna a d th< advcnning-sals ratu m lh<s <9uatiom It mq, wetlhtMtlACCrilolvarlabkelACtatlodlAemeansaimdWeWa< - fimn M lhc mnn sal« d th nvn firm.a it e not appaz<M rmm W<s r<grtsvo« Ilat a mrr<LUOn eaun b<twem advertisirg inkmip avd pro6t dilkre«m. . Evm G a cmrtlatian b<lw<m advcn'sing iot<n<iry aM pmlk diQC: couNbealablishcd.thproblend'mtmineuliwwouNt<mein~ tltAelargefimu»arcudunryartmo~eprofiubkthanltweiimnlAC' aM tAC nneg nrms tare the am<pri<cmG margim n bmA iMmMV.thc ( iMUSIry win <ahibe a larga adv<il'ning-aaln ratu. TTc Yrgc frm< wi9 adv<nis ma< tAe Iarga art the price-cwt nu<g4n A bt ' win depend on Aow Iaeg. lbc krge f vrc, how mufi IAeY wolribak , u• b W mdusvy ad.erbsing k additi- e c nat eku Wn Ihe Aem, `, d bcing Aduw minimum e/fciem acak art IA<umc m all indostrin as ry. vsl imPlt:. Pels 11911a) Faz inre<ligated ~he eaiq<~ d ttonomia d xut w vdverlning in th ln bm n~d cigarnk indosniec Ne (mds m xak <lkeu m th< ws d ngar<tl<s bul he argum tAat ecommim d uak d~ c.ist in eMCnking bcn. ln a•arkn d d:maM H«vom m.dving advenising aM stimmW usi~ qwled daU t« 33 M pradoo:n ovU pniod 195- a aummy va<iebk equd m o« ror loal4mu me m r« tmlimW Gmu (thox utlirc m moat «gimW mark<IS) Ad a pgnifwm rc crcif ienL Peks imaprm tA's es «Ne~ fa w of rsk in advcni.i~. TAS t<rprclation 's adequat<ly supponed Ay the <v:1ma. IwwerernA dope dummy ralAC tAen an inl<r¢pl dummy woaN IaK bccn rcymrd m leu do-ccly th AypMhac tnx lhe adresismgdannu 6nm's ks dkdi.e men Ilnl d large bmn Wlnt P<la dwm's thM. huldin own aM eompelili.e advenisMg spending mdustry amege picq mN ne«rc mnunL amau (am sdl ks bm Ovn W5 5mn n's rwt obrqrs wAy aonomisd suk u advasiving muu b<lh<uue d N's dMvems: the Imge Grmc meY Asx gown brge bcaos their vdveni<mg wu mom <R ive AACrnetirdY, lh kd f my en vcngc hav< Indfiam0y ema6 Plents W thm be fomd m edvenia ively Ilun lhe Mturmk m oN« W aen lAe'c pradune a~ pdxebk pm WeW~swneNhtbvttAezatudinprovid<ro0~mevidemznupporl iog thc ninawe kt ebrc tA< impanan<t d<wiwmks d wk h adv<[tising The ame negali.e o~ndutloa <mergv 4wn a mrvey o ' avlyas None d tk nudie di.avsved 'n ch.qrtLn a« dtA<raWU doLpte d rvgge.n tAe <aiseemc decartamis n ~k Nonc d ths </fon~ ert.<ry rtl'mbk e wc.rgic in lhes d~apkr bm tbry genaany poi« to diminishieg mums to cok hr edrtlkuml Si~ tA< overan impresion kft by «ossanian st W ks d profibbilil aN by timeKerka demud t<timatwn s lAat Nllk k kiwwM1 we tum n m iMit<a mminatiom d tAC 9uawn le d retom to sa lAn ~ wo poaebk wurcv dmn<ovtvnltr<lurm ro s«k'm advMmn/ a TAC fnL wAidt we an pauniary <mnomiq e tAM tA< pris • adrcnisi~q mcvaga mny changc wnh tAc numbc d mevegn purduan tl de merM kr advcnisi~p mcsega .rcm pelfeny compnluvp • wwN <zpeq the prke Per mrsvge m«mau mmtard to anY Wnkvl: fmm «, m tAe me d e ruy Iuge rntuprise to <uc wirA lh numb 6L°0 6S6t5
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T>U~pe'rteym i
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Freq uq .pos «ioadm, e3N5U5. Gootlwil,mkan ~m,.,wlnmae.~agmuknennn~.odet 6./23Po. modey 112 Wwn'S. ry poNnv: masbmodtl.llx. .uhe1 vMm madel. »e. Nanoeamlry aswrmqlon faeh rieemse iMUnry. IqIK 1a9. NS Idemiliavionproblem: demeM enimnum li-IJ, <l.3xx. m.nmkn. ad.inF ,uS. ba xla e~l.nkin d~^•na rar Ny1vq IeB.M9, )9a19J, SJS.A4 xli.n4 na mma. anroiri~+l nw., a.l o.lta Ixa ~rZ ~"w.- 1», ua mllmu~iyin.Ieble9. imopucou eeussbm biu ie, I I9, IM.IS0151.189. Lwtie in pwc.F.Yne deumn.112 Imdne.w,naww1,113. Jon ov r n~m.e~. u I(mked dem.M,cmrtspwMma in edrmismg Ja iem+vnd &aber, IDI. for dynkm'r modAS, <IAL 60 (oesMae.rmeiMUn7.139,15x. li,. l. nl. l. l. , u9. ~a Lh iN.,,m.,nt w,.IV23u. nYW.N2 nsrfoc4m..knsFeresmodeLlWlOi.113. u<ky5~ 1a13,,iN.5rca/wAmeriunTOEUroCO. Lyd: E. Nnkn.m Mdicin<CompnY.9-», I,-IB, )5.118. 80,8).85. .enitln&Ifl~• .M pernniuY dicconomler, 211 . veMnudia116118. n.lmn d.d.envine: 24 and manepolY puaar, 4 Mekatlummade4: .Mvwnqni.Mwk.ilS3Ja emWnm E04t~fmmsMbr.MV: 0.lxa. nwlu~uon~e8nniwndesm.109. - norvNnur,lll-112 hemsieemu< indw~in~ p.ld9,llil6nl, IH.IIa I58-na 191. mJ, v2 FWAnqverswufmrnrm,peciGOtianlb,-I]1 mufmideMktlin~erayle: wGba Kerct Ne lx 168-J69. M.,m.m.,tn,Mmmoe.tlaw). - b,m vm mmry rat va ~nn d.me~a m.xa<x. lx In.)ac ,knd.m madeB, )b1. IbS169. wvl,d„eNunB )4i5. f 6ymWb.,iRa Me0i4 mmnvd .c unmeemref md sbe bomogmns) .mmpion kql W tNi Men' Clo16in6indanrrdw.M.)IS ttGO 59615
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; CHANGES IN CIGARETTE NR ~ICE AND CONSUMPTION B1' /111111 AIEN IN BRITAIN, 1946-71 : A PRELIMINARY ANALYSIS M. n. . usseu
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?aS f!tL [L% d§Si3e_ee25'x'ri?i~ ~ nassnr x r w
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~I diRnvmc m Ihc pa <m or relanve magnitude nf ycarao. x WM1Crcupnssiblt MIh b< eal.apolu<d con aM audi<~ indica fm 1961 werc compaeeJ wilM1 M1< fnrttav nMain<d bY muhiplyiag Ih< 1966 PI tgur<by IM n~b d ihe 1q6] MS numbcr, ukm from Ih<May, 1968 issut la Ib< /9Cb Fgur< Ths provldd a<Md on In<Parsicuk olvM, as wcP u wme indicstion d Inc gcn<ral value dour prwdur<x 00 nuw dixux tF< individuil cost serie and rhmt m"' ardtt.IM1e circvimim a eudiem< numb<ra Ouldoor aM t<4v'sbn audicns nv:Fbers wcw availabk ra 1961, sr Ihry wiB nd be deaM wiW cre Tabk A.t, which folbu~ rns union pr<sne tle mmp4k a<! of annuai msl, circulaliun arM CPM indiav o ror wsH from i9a6 mmogh 196'/. «caq for IinY dedis n 1951. Tlx rerc d in wc slowa rmm 19M to 19511 aM anc 196J man m tbc peaod 195061 Th< verall incr<a.¢ b IF<m.u ratio wu rrom.59 n 19<6 to LM b 196I aM Li6 in 1966 TM1C I961 f:gurt was latm fmma nniBhl lis fil l01963bG whf<h <apl.ind Bs% d In< varians m sFC mn mtio u moz yus. TM MS fgurs indiulete 1967 vals d IJ>, quitt <los b ewmsimaC o IJ6J6 TFe cwr nrb f« newspapers f<P from BJ is 19a6 b.RZ n 1951. x 467 nmdiH an rnmia6 Loa ;n 19su sna m< na d incrns sttmN b sbw slsgnny aAa 19W. rM1C 1961 ram% wu krn fmm a quMralk finM b 1960.66 The <qualion nd. R' d.99. OYr ror<ax velu<d 13165 wu quik cbz b th MS numly d 1}2 Tn<mn ralb rm busincss publicaliom ros 9owIY frOm.11 m 1916 o in 1952 Thcr<afleIk riz was mm<npid aad by I9fi6/h nfp as 1.18 SliBhl sb<k<nings dnc~ rak diacrns.ucn b Mv<Omimd m 195659 ar41961fiQ A quednlic rstr<d to 1959{6 <xpkind 99.96•/. d Ih ver®se in thns Yeen 4 Bmm1<d a br<au W 196] d IeUM Ths wu a good bil bebw Ihc Mg numbc d 1<), bW e wn iwl dm wnel mnN hc aorc m rcconcik ae dacrtqnq. .. Th rclrork radio ms ratio dttli-l rapidh f 295 n I916 b. LW ir 195g The raP awnfls wu gmlk rnchi. .9g n k966 Tnes wa a1moL rw <nange b<Iwem 196t aM 1966. Ia fM, a pragla bW a atandud mrar d lirc filt<d ro 1962-66 had v: Rs d anH .44 .ows. rne <bp<waz prcib.e b,n a.ak bom mme.ia nol ataleliner aignifianLThisiincwasuxdbrorcmt196'!. "' 1FC spn n 19Gfi la 12a In 1951/. li feil l0 9( n IY9~oilerircrurimi slmJily b'Iq n 196fi. A qwulrali< rnlel lo Ih< Ycvrs 105'Lro nplainN Yl"„ of tM1< vmians m the mn praduml a fnmau fw 14F] M 121 W, wFicM1 s das b Ihe MS fgus of 122. Tnc cosl rario f« nnwwk bkvision ro< repMly from 2a in 19M 0 91 in 195]. 11 (ell sligM1ay in 1958 aM ro: slorty ro 101 in 19fib TM1e 1961 <slimale waz latm rrom a quadnlic fitlal to 1960.66 Th"s on had an ft' of.9)9t. mThe con b fs spd telev ndily aM npiaty rnrougnoW iFe period. rit ciimbel Rom ~Ia mr19'A b LP m 1966. Th ris was slriki~ m fnc pmiad 195a54 Fm 196), w< uttd a qoadnik lirld b/96b6Q whirJ: aisovp4inel ovv99% dth<vmbrvz iavalrM. Our enime¢ for 1961 wu IiC 21q sliBbtY b<low Ihc MS fgus d IG6. rnu was wnaiatam wim tIx raa m.r rrsn t9(A b 1964 tne M iMn snow<d an mcss: d n% wherus Ih< MS fturn ro.e .Imwt u~ frmn AS magazine aud4ns nlb ros hom 1- Inrough 1911 Io.50. h f<91o M in 1955 aM tnm mx mcadily b 6<n 1966 A ssnignl fro find tte ynrs 195Sb6 well Tn< R' wu .9g9g. aM tne staMeN wu .006. Tnis equalion p<oaucW an csaim.x d IJku rm i9s>. wrhieM1 agred quix weP wiih ~n< IJIS d<rived frOm IFe MS xrka TM1C ncwspaptt auaimm nlio d<c1inW stndity frmm 6I m 1916 lo .X n 196) k Ihm roz ro SS m 196Q A nnigM lirc 611ad /0 196J66 yiNded m cnimax far 196] d 11186, cbz mough ro Ihc MS figus 111. o Tle auai<mz ratb rm businea publicasiom ros frsa At n 19C6 b.6t in 196I. A 4rg<jump n thc 1- oavrrM in 1956, dividing /he p<r'ial into Iwo subpcrbds A quadralk funclim d timc np4im191% dtbx varian¢ n tM1C aW 4aa ntio n tnc 195g{6 p<rioq ard produmd et< ror 1961 d 125.Q Ths agsed with the MS (gus d t35. mThe audkna rub f« rMb w om d the m Ir mz frOm .50 m 1946 to .5g m 195Q b91o .53 m 11.1 <roz to S6 n t95Q !cP b N 4 1959, aM rox b 65 in 1966 A quedretk tttd to 195Ab6 nad a s1aMaN mrm d ka than 005, aM wu cmpby<d to mak<tne 196i nlimal<. Thc ootdoor wp nlu rou frpn .(910 .)1 M19:n 19M b 1952 Tnerc a/tn il ms nndily aM npNly, rnching I)J in 1966. A qaadntk Glted b 1950.56 haa an R' d 99g5 artl a s1aMaN nror d 009 Thn eqoaion ws oud b alim.b 19s1. 0690 bS6'[S
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euFli.F mil prcn aFk.'IFe Ifm u M lahn Sarisrir.. IIfLSIIm<camPilN an in avM rbe Prte d regukr ci6arc 6- n lea 1W n M IM Con Indn irMU fd Ib< peia M klne-izW fJrn r.gar<I az bcgw n 19 A In Agriculmnl Slalisfi<y Ibc pc~annrcnl d1A6 triwrt eubinlrts an agc prim per pactage xricz wbi<h bowevm, e bard on IFc BLS iMnaflF lailirciaof«gula cignre W< muk<fFC fxo 815 wia kom IbelNwdboak d labm Sbl'sfkr, 196g Th<abwmtt rcrad lai«'urdu was basd rntkdy an tA< rtguiv cigvclk xris Orim m 19GJ. For I9C0 ard bla y<en bom Ih<rcgulv inan .M IFe Inda d IFe mi<c d fkv kings wert uxd. RWr zria maliW fo IKO = fU0 nM wcighfed by fb<ir <daE.e vlm in 19lR Ttw weigM1l d.60J e1lacFd m fpva fnlifw m rbe mleumm d kaving than e W prier to 196Q F m ycv w<rt <rt abk fo obfain Mal prae figura fa non-fllv king; wbkh wne prket b<w<m rtgohrs ud filtm at wbeWak uwl 19M. Nen-0Ilv kings a<wenW !m a 60 ow 19% d mW ciprcfla akl sr 19fi0. aM tbis trrctian I+ss bxe failing sma. Thc mda of «kti.e Mait Priw v mnqmcA by diadvg fbe abwlux rtlN Prke inda'rys1 dcmibd by lM1C Cenwmtt P<i<e Ina<a, ukm fran Us 1969Ewnonek Rcpon dlle Pmidenlard rmmW"ving to 19W = t00. . BoW P<ia indins art 9wvm m ubk C.4 TM wlwkak indu ros raMdh «IVim m Ibe rtbd ¢ria rran 195, IFrougp 19N. p dclind to cpuslity widr tbc Mnd iMS n Ilrz bax yem d 19fi0. Rka 196Q Nc <eua xaiv wx rep{dt% wMk 1M1< wAokssk um nda <axnrkuy rtad9't'bc wr*<IntioncoeRrckM bnwem fbe cwo miesrn.Xli ovc< Ils pvintl 19G]fit. Idmpy, IF<rtleil Prks iMex woub h<Ibc bvlm siin for eur ttudy, ma demaM revpoMs m<anJ priax na whokak Priav unkunauly. fhs onmrfvim dfiRV frgarclln prmc m t9(U k.d m su<pca Ibal oru nwsurad r<lefi.e <eing prke iiMa mey be wbj<d lo mvid<nbk aw<. Udkr Sdrs Enir.m<a Usirg Ibc wbokvk yrim aod our dak on 1M1< nunMV d<igarclf<s sd0. w< ®n <omWl< a firat eslimak ef eroa doRv rtv<nue< lm.n cignrdtv for aN si< mnjm predums k x<nu dWrabk m ut<sewum .,,,,p hS5L5
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M. A. N. R(/SSLL I a~
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~n~LYS/s of vR/C[5 ~s0 CO~s[ xfPT/O.~' Of C/L~R£TTGS
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r nN INe v< • <6 iVSUnI impkr am xa n ow a,< r n•mixn inan n amnW rey modiy m< nR F.om I4sl ~o i4ns, pxsan6= nu regixvnbm rox gs ;, wn2 bBl M1ick rcgi.wa~ions climbed only 8].1'~ An imompkk rcsual ' q<IM1e Im < Com a Com uM pubinnet m~he 196g Slal;sli<akAbnraa ;nd;uled an n<iry xngn miln pv rc&slned pasunga <ar from IQ95U w 11,20p o.e Ihu umc p<riod. Tha sug8<sa shal IN 8rowb m pau<nga ur re® - au dlne growN m tlu sudirnsfa ourdoa .• adven i n&aM IM1amlh< malltt rcbli.c growN u blal rtnkk «gp. vndcr<sl;maln audkn¢ e wsh Conuqu<n(IY. M uw1 a•~i 19W ~ IW indea d privase parungn a rt8ksnliore ss ow inda d r. audima si«. Alaska aral Hawao apr<ard n IN r<8ntnbon stali9ia for Ihe f m 1959 Bm a< IM1<x Iwo sralm log<Ih<r naA only about ]MppB n Inal Y<ar, m againss 59.JEEAOU for tk coumry e a wnokero a sempt waa mah b adjus for Ihs i-:amcy. Anahv problan is Ihm r<gistnlion Bgurn indude ®rs .xrappd duri~p tbc year, aM Ihry doubk wunt <an r<enkrd n Iwo sbt¢ Bu1 em¢ ustnt in s d rbang< aM n m kvda Ihde e ao mad o adjvallnc registrelion frgurs b obam a Yehi<In hs uc un<t Therz u m rcason lo wspca rMS eny suA Wjunnrcnl wouM ha.cvqu ul eRxr on m<asur<d audiena grawlk IhThCUrs ckar <vidern d<M1ange m aourm sN mahods aMalyi~g ~hc radio aM sA<visbn audi<na irMia BotM1 wex bax! w lwmo rnched'figurn up to 1959.Ik rsda numbers an Radk.AdaMUio` Bur<av r<psrs8 aM IFC ulevnion Bgurn on lanua,F<brvur Nidam alinga In bolh vux, Ilx 1959 numb<n pnblNud N 19fl shooM hnrt b<m subjM b liak <rror. Th numb<rs fram 19(A asN 196I• op Ibe omv hand w<u battd on -noun dnssgc figura d unaialmnt ori~8 . Tnus dx diR<rcm< bnwem IN I9fl aM 196< rrgusa awM h< . lal:m w mnn <;mpg ma rrem 195s b 1959 honn duzpabouxhoN wiln mme vu rox 3% fa radio aM 14 <% br g<bridon Thuwnde uems pvik rnsonabk fa mdio: poniblr IN growiIg poppluiry d ur aM scwM radias aaovne fw M1 wc <mplq IN adjvtlmml d<vis d<uri6el abov< b dial<iburc mis <hange uur Ilx im<raa : 195539, ard Ih<rcq axumc shae was m chang< w imendry A me from1950b 1955. , h Ann mi IikdYI 1 de x;lY •d ol xkvi. u drorp~ in da laic I45U'S gl wc M1a.c d;rtt euvid<na v inc mry IwmN E S;mrso^ or'Bevt<kvisinn Buxau d nd.nrxivg hu. proridel rgurn m rv homrs aM linc :iwm 9i<winfi pn nom< par day from 19JU tnrougn 110 . Tn: farmc urea from NBC, wu malad a. d lanuary BrN d wd ynr, aM wss basM on ARF/ Burcau d In<Cmrva Svrnys.xs sals dma aM olna iMuslry sourcca Tts laaa uria mnreb1 d ennua/ sv<ra8a from A C Nblxn& Co. III 195Q rov naun aM JS minms w<u apem pn day pa TV hom< wabhing ukvvwn By 195i, ths rrgurt nad baromc four nours aM 46 minnxa Thc labnt obxrvBrion- far 196& ws+ fi.e Irours sM <E Icu lasnd a urin for av<rag< l V homa q areng;ng Ilu rckvam lanuary oburralwm niahiplPn8lhox nvmb<rs q minutv dvirwhp om<and s®ling l019fi0= IW gav<ua our TV audi<M<- AnnuollMi«s7r196]' In g<nml catnpdation (aM imcrpoblion/ mahods acsvm< Inal IN uM<fIying nriabk <an h< approximabd by a simpk fun«lon d rim<. TM1e dnird valus ert thm simply rnd o0 fram on <almau d th"u lumtbn w<wuN ha.<appli<d suM an approa<n dirtdlY lo IM1<coa aM c'a<uklian irMias. bul we d<cidnl b<.<amlrc rckfi.c ralMr Insn aeaomm<oaamdr<vhr . Tne cros indimwcmdiviMd q snc implknddhla rargrna mlivnal pradua Qran lh< Survey d Currcm Busimnl lo ablam m iiMa d w<r<r b mh <omvun n In<•<on ralio. sap<rim<nu- rclauw p- indint<d thm Ih'n nlo waa mort aabk Inan thou rauhing (mm vsi~ tne wnaknk pris iiMaa.lhc whoksak pris mdn for induslnal camm~d'sia n th< imdicR dallelu rm non-0anbk mnwmqion BoW Ihe ms nliaa aM sb<i Iogarilhrrts wx eaamimq bw Ihe Uan addad no[hi~g bm mmpkahr. Circulasion aN audi<nrc fndica wcx diviE<d q Rc pnpulalian d Ine Ilaild Slatn m miNiorsdp<rwn(frarn IN 19(9 Ewrmmk R<poa ef IN Rrcsidml{ Ths yvalkm witl Ix Ittmal Ile'audknu ratio•. Tne bgerithm d Inesc rawes weu alv exam;neQ bm agam IM1ere waz _- m.aa°meAaa.n.w:e;.nwlo«.w.mrv~•m.n,e. nx..e.nv eimnu ~o ~ro•i emnrolH we .w M. 6810 5S5S5
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Sofarssltno ncnav Maz <mptmlor<Ime arka 1 sMs is ng ovllaYS'in t inavzvy. Tbu s Fcrgvmzta 196E/ ana o lyzis adv<rld IM fqum indmtry, whid M1ai be<n mrnliond by Bam az having'gr<al' proaua diRCmmiation bartiM lo <mry.zr In tlm pozlwu pniod Faguron no s Ile c^try d al kaq Im an¢<az(vl whizkey-producing hrma mfii<11 advMix a. zU braMm yeodumy Thc martn shart ard rala d rcmm d the lapf«u dislilknbaw relkq d<sOdc an i^a<as oz thc rslio d advMisily lo Wm ror th indmpy f« man dlhe pcriad Hs mon pmmasi.e ridmxe e rM1C d<vusizg mmkq sM1m<hcN by Ih lop Iw<nry brand; d<spik e^ incl<as m tbm sbart d lotal indunry advenning Unforlmmmly, az'n uNuNry hm m«m a siuabk sbJl m ronsumc tmky awq fran spir# b4eds aM bonda am IowaN Calud'an and ScoW, wM1izkey, g® aM voekq , wbW, F<rgusm rals To wlut ext<m Iba pmWrmuza dlM1e mdualry shiflandtowhat<atmtaeabibiuthcinOmn¢dad.enMng i dil&uI so son out. FomvudkxM1av<mmparmlhealebilirydmarkdzbaraieiMlMrim NmurhaMtukadvulizingT<Ian9691hvzMlc+mbrnd.l+m rcabairy for a grovp d toiktria am msmaim thm b. gmup d kod iumi <vm ti,qM1 the fom u<zm advMem km mtmavdy. cnn 1196)1 <..minm aam rm IbJ rvuzaign iMwv- cov<ring Ilm - p<riod I9aE-54 Inavavim w<m ElMam Imo thns wilh rtWivNy bigh aM tbox wilb modemle «Inw e<yendmoavaailrienlmtimw Ibe bsssdivagmemaMGueliWi.einfa<ma4on:Pr<nmmblYU'ndiv'®m borc .om< rdamn m eiRC- iri d-kiry mt<nuy. vft. <~ sqvart sczt con fovM Umt udm4im wiN cxtrnnss produvt ddkn ort likcry a cabiba higb:Nabiliry /Lan iMuariv wqh moMatt or low product diRtt<ntiaYOn On thc otM1m havd. whm slebiliry p<rfon^an« wss divNm i^m thra damm (high nlmi® md IowA thc dJf<mn<v ammg Ihc Ibrm grovps d iMVSVia wac imyo: f nt ilm ren d the rtudy ex minm mhv dekrmhunb d abem alr bJily, aIM ^o elt<mpt b sua IM1ep mpmam mnuibutio wm made gcbxidc (1966) mamimd tle slabiliry d thc akar< d thc IargM . m eigM digopdutic i<quztzkP va4 dal. Gwn <he 195Pa Nn rovlM m signifwm dm ras io msrkn shnrt nabiliry ra the rms dilkrmtutm oligopnf verw tlc fom uMiRvWUtm mdustrim Marn aM Walgrtm (19E01 vnalyem th ahau rubi4ty d.1B kndivg. -!^ n 11 iM m thc IKrizN 19 .mM ro zigniream . ahirlr m mnd n eirt<~ :sztbbl onwhnz voWabh a<vom/ m ^zpaa argumcntctban lo c.aminalmn d cvidmtt Thert i 01tk evidrnawlo svgg<p IM1at adv<nising crnla durabk pall«m d wrsomer byalry. (h: It< olM1n bnd. 4tlk rtrvlrs susi, an M1ypolM's cilhm. IJemam noaia lsaa rnmc op mie, zm bam racls am comgarim,v d slaMliry beve grncralh Gikd lo conaidcoller dexrminanu d bmndawitckng aM nykclm lo mke imo aaoom IM1e nabiliry d advtttmng wllaya Ihcrosdvn . s sammmrxadcon<wr:ona W< b<ga^ tbv cbaqv by argvingzhal w Ih< <mcm tbal adv<rtising makcs poasibk mo^olwly profls it m 9ain (196& pp EAI-EPEI hm ass<rlmvthmaadvcrtiiy dv<afim raA inhibilmlry: m°vbmM1R zva.nlalnree.,<~~r~•v.6w,IMx.N~..ywmrnn envan Inxlh< Iaa Ihrx xctioni m< M1ase argW thm nn <vMrna uuls az rvpWa d 9aina ivdV~rc^t m me malm.z1 w< hmc not how<vcr, nro.m sain wrong w< r invmrplm aizal i«IS d Ihc mmtbn b<MMI aav«luing aM wmperiri^n W<mtm lbal a e«r<latiun bdween advmteing am may aia in the VS ewromy. thovgh ILe d<bnk on thu ttklbyllm am. A c«rclmin^ hclw<m mvcnui~ am ~I- abiliry hm bxm m~frmm by a zmmbn d invmtigabn bm src fiowm Ibal bolb corr<bliom woutl he mpcc<m cvm wbem advmlizbg did Iwl anY way confnbv¢ to acti,g or <aploilir:g mtry barrici Tfi< gr<al« Ihc nrc d p-g thc gmalaz thc oMimN ad.M'mng-salm nlio, ~M1 .nrn ~+wmvetiee,lsopnumm~xa,.nee efw^idl:, 5890 6S6i5
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M::<w<Ilk r visad NEUrn fm ~ul d~nre sab Iry cn any, ht Ikc fiEures go M1rct anh ro 1956. 1~ addni nci~hn Manwdl nm Prin Ink Mar< savcd I~ rcvi. i cs a foe .1. by tyK of cigarale Luckily, Nc rcvical louh do mn diRa by mart 1- a kw -in d a billion cigar<rln from n. numbers originally pvblisM1ad a Print<r's Ink. <.ceq in ~M1rs insuncez In IM1ec pss IAmcrinn 1956; Liggcn & My<ra 1956: ard Rrown & Williammn. 19581 IM1<diurcpsncin swn Wrg <nougL lo rcquirc wrrc aaion MaawdlS GEUrn art takm a< sup<rinr, aM tb< czlimatn d sala by trpe d<igarNrc rcvisvl propor. aldy w<qunm Ihc'v mW wiN IM1e Maaw<Y nlimam 11OMaaw<IYs 1966 bislmid summarr Ass compkk figura Im aM1e yean 1959 tbrougM1 196I. Aa Ih<s u< rcvislnn d Ilc Prm Ink <alimstq IM1ry ar«mplorcd bttc Tle sntl arimna anks d~r a iEa~nm M tyE rm w<x <ompnr am,n<romr. ®<rbwn., aa<cx Pnns n.d Prtce /Micn c zWtl discua wM1Okvk qrcn frst Th<sc wi0 bc usil n 0< nnt tt dolbt aln d agartki as w<E as fmmi~ the bsfn Iwrour wlwksek price inda fm cignmta<a W<aM1S9 tbm m~uldx Ibc connrvaion of a rctail price mdex. wMkzak pim nmrakm Iran glandaNA Poohl~dmlry Survey. kr Tobauo. ('rtncaly, Ils deb d ph< <M1Snge wert glrcn Annuat veraga w<rt compumd by wNgbti~g nd pr'vx by Jt mmha d momm n in rorca m m< L.o wb<m a - wn dimamd brvids d IM prrc rypc m dirtcruq Pn'tt; e w<ightd.vengc ass elm rekm. IM1C wNghrz bemg uail aka ottM1e bra- TM1C prim uzd v<donars yc I,OORdymla aubalnniag a.ailabk demnnls am mcwm~ rcA<ml <a<~ wcau npw IM1s lyvm to be a bA lown Ibm aavJ rulimd prim fa aso m wna Tb<s prm asrvmc atl awhbk d'n<mMS la Ee UkM rM1W.h s r.u m r<Qirc lnem s«ond. u ~wr i~xiudc0. Thes qabably add arouM IO ann pn thoussNab th<prims-u<tb<ncat uabn. Toamnrvaaeindndrclnti.cwhol®kp4z;xf wmputeE m eMdu# whdsak prix iMea usiy une ftln n 19b0 v ae~hK The indea wu divMM by Ile Mmbak prim indca. lakm from W< 19fA Economic Repon d Ihc Prc.ddrnt avd normalizM u 19W e 100. 60L0 5S6t5
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~, n<~n<. aB<~ :vm<k a 1955 aw l< <I nr rv Ms am in< Ivs9 m mr ao. 6m nl I'I fE mn IM only war ovl. 11 i~l.ia,v M ,n inc r959 r6vr< m loq a« 103. wnes 1955 =ol(p. Thes 19M1I1,~I95v raliv s fakm al 1 U1, sins Ipb~ MS eM Ihc 196d M agrs on Ihis Tha mcam whrn Ihc 19db eM 195P58 fgvrs ar< <onvmlal lo !A bas. Inq art divNed 6y a number sligM1ily ka Inan IA05 ins nd M Fy LOI. Thc cnang< Ihaa ~g Ine 19598 numbs slighdy vpwarC m Ine direqioo ~ n< vs9c.re.rc n<m a mkiag m< 1.11 rs ra« ..Iu< vtc <mnlorofv6<low. or aaivali~ ynrio.r<x <nan8s r 1955 ~n. ugM1 195g e a,M baaua n wwW mad; nc~ slyrp fin , r<Ia0 1955 IM1 furd in pcriod. k mrrc m<aia. .mp.ria r~ maa< Fnw«a wa ost cnane<. indicaled FY Ik PI aN MS figurn The PI magaabe <mt nda show a ISa'; incr<az bclwem 1950 arM 1966, wM1ik Ihe Mg a inJica~e a Id6'; rise. A similar wOCm Iwlds f« ncwspap<r; We fgur<, beiag 18°; aM >5%. MS indkals a dightty 6sala incras p .c Publin c M1ow Id)% rc I}%% The lwo I in fairlyc t¢ aP<cmcm for 1. fhrs Driot medi rnF« sp« ediq MS snows rs of 5% From 1952 shroog6 196q wnik the (aajuskd/ PI inda1e'ns a 6i! over 11 % Nad we nM madc Ih< adjuslm<ms diavssd abovc 14 dirtcrrn« wovtl haae bw er. If x< nad 4ken Ih< 1959C f~g«e n 4 slowl. lne mdq woukl ha,e risrn araurq Id ., ove tne same intervak almoa Ihrte «~M1C Miinn<ese. 1' FinN1Y, rrom 1953 rhrovgn 196Q MS sMws an mcrcae d 263•/, in spm Itlcrnion canz whik In< PI fyvrs rbc nnly 12g% Parl ar 16c dirt<r<na ma; be acwvm<a ror Fy ~n<Ga rM1ar nc~ PI «rmae mdudv lal<m a,N proauclion <oal> whid m<y aar r<B atcadily eaft ue fihie; wnik IR MS uria c based emrtdy eo qvolad prime lime - The 1<A rm <amwliF3ity aorlied lo fh cosl iMea abo,e ykNa nc~lMlowi~ rcsolls ror fhe d<culaliw aM aodims mdisz whem aR nvmhrs arc IM1C corrcvponding 1959 indea rakd fo 1950 s 100: , M<divm $crin B (1959) Scrie C(196!) magazin<s 136 12g ewsMPcrs 10] 101 busirc.x Publinti0as 12) 133 raei. Qx uo c 9 81; ~alao.r d 1, apP<zrs fhal Ine magaairc aM ncwspnps xri<s may bc IIak<n as wribk. Thal ix xc caaclva< Ihu Ih< rcrnion m Ilr PI ssudy m 19(9doa nol invol.e svbsunlirc cnange in Ih<s inaiaz ard w<wm- birc Ih<dirt<r<nl muf<c me<naninllr. Wc muu dal indiridvally wilh busimss publinruvs, ovtdoor, radio aiM kkvison. Ir we caamim Ihe MS 1Mea d busiv<s Doblintiom <irc~lation as wdl a. Ih< Iwo PI uritt Ihe followirg qtlem murga 11955 = 100): Y<ar PISC.e.B PI&ricsC MS - 1955 100 IOO 100 1956 101 - IOd 195i 1025 - I10 1958 Io8.5 115 1959 109.5 115 I16 umb<f; h s¢ma rczaomnk w assunc fhal fh< 19fl M lguraruM<rslas tnc growln ralc Bom /955101959. Wc adjvu th< 1955-59 growN rala az foll0wa Le1 < he IM1e rounh om M 115/109.5 Tb<n xc mahiplY fle 1956a figvrt by r. Ine 111. frgus by l, eM Oc 1958R ngus bY r'. Wes ws m us IRe 196f ralus a dclumme rhe 19.59 mtiw an Ihe adiurlm<m wovtl lake plea e tnc errJ 1959-59, ains we wouN haw b<m <orr<di~ on1Y Je 1959 s Pan of Ine aiR vlry may bc vM<nlood by beking al IM1<pro<MUm MS ¢nDlnys lo aamtrvn IM1e busincas publinlion mdea M5s niMnm ampk ar IS] bvsv<s wp:rs <overs only ebovl M% af sn tirnlatiors whereaa 16eb ®mpk R lo wnsums m.gaaka wren .uma g0% a erculmm~ lturt s rimph . ler¢ nombc af am.n bvdnen w6limiony mak mg wnsBO«lon a a arcula/lon Inan a ainkvh 4wrt PI usei an i~Mn er mor« vehck regislmtbn ro rt Ihe avdkns rw o«dow advmixing n was somewhu ao.prising n.iew M 1. anilabilip d ortxial (gmez rMl a con0ict <a'ssd 6clwsn Ile 1959 aM 1961 iMen W< Ioak Ihc -~ Bmwv IX Publk Rwds figoss, W61isnM n annoal nomb<n MHighwaySlmisfpeM wmpild m SlaiMard g Poors Induslry $urvcy., fs rqislreciom N Winldy- ownel wvengs nrs aM Imal mol« .ehicln Figura wert a.ailabk E890 656?S
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!+at ) 5/s OT Pk/C£S nAD COsSGA/PT(OA OT C/G.~R£TT£5 ~wy~m. ao-.::d~ion..a.~ewwaumr..mtia
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AA'ALY515OF PR/C£S /N'D LONS<'MPT/ON Of C/GARET!£S
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r- v w
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'%,dk5XNW BRITISH JOURNAL OF PREVENTIVE & SOCIAL MEDICINE ~ xxawE~nE~ .~ x ~ ~ron~ VOLUME l] 1973 j,u~x s~so~cnc ~,55oC1~i~Ox iAVlsiocx sp~~RE LoxDOx wcix 9tn
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cvSy au4y &is!zwp anaub!s qluy rvaun> sp!a![ capze&,> WWlo.ry maq aN v palew!lu vnl~pu>JZa a41 P vomul a4a Aq bum,uaepe uuJ Inol p alawysa abV 8umya..ptl a4t ev!SIG~s!^W oW Jewe'w9W^Ie Vwqey .. swmsY uw~6u n a snlpe wy Pe+eo S4 p»^po+lm uan uozu ie!weK4n. [uv Spiguu a In 1e41 %QO! nl zqa s ile ve ~aNa>sad pvevPm a41'!'J iyel u! u.mys w nwBiJ Wun<Pe a4y v8ew>anJ i4ean vepo ol uPm w o>^8l PooB ~w.r.u4 alol^ww ol We o8enneaie+ol.4essaaausenll W">!Ia4>9olalsuPOOtaVO~le^lan~ yv+n~w wonenlanil re>tol+ea[ Yvys p.pweo tl P>uoiwaw K^/ vuw( ryl p xne>aq a!9v!ivu^ al!eb vam wnb~ [ueyy yoots Sa41 se Pas^ aq wu qnm !VN w^+1 Wle!n>!w m41 a8nu>a+atl ne+ a41 xi41 u I^1JIa4 v a~PV 1^^ N p wo~~!pa,pfil-KOJ >41 w+eaJJ. Icyl evWaK^p~~JaylBUn,lanpevl _ n.+JsumWnlo._~ owe 51955 0"l01 aN p.a!~eW. zo.KOw, u4s >P!aap ol We waw8pnf s!a+axa os jq!esnJ Ws! mIW N Wtqoalu aq N^oa olsa.e8u uo w>JS 8u!sy .aa.pepa9aNaa+aE ay> ~ va&j qeao»a ou We'a8ze1 au.e payow! qunove as!1 tase>wos u! Fp^W4 omNol a4s0 We u1WYd!O V Wv9. m.m.eqoy bu!iow5 8 We+6 We elrezee!~ V WezB. >s Wq!usap ae.. m^owe 'zwnoy Yaso Suew ui n8exuauC &nsqm!® vopq 8u!ulu.pe SueJuwap ry!o~ We+B a4~ wezl Wu^Pap x. Wu W>qn!p. zo uo!wuwW !uwa8, nl rvaJs weowe r.!1 u 8uo1 Wlwapv8u!ul+v.pe8ele4s>wnsseolve^WPewyzn~a v'YaJdWe ssBcuov,svyGuuBw,z>y!P Weua!>BrJ~uar.iPat Wv~a4+ua+~0'aaua ~e vaqsunu >Iq!suas' p vs .Guo ays ve qeP IVN a411^9 pasu!q ase Nncz aw Ylwpozp wanlpp ol pazyeia>JS xi eWw pvx.w •wu Wa pvaoa INS wassa ays ol Yaua.ee~a q Pzw.aP vam sv^Iry wdxa plot ?w+J xil/ P 4a^w .wy >tew!lu q um8l aa41 x^ a,iS puey Sq wsoP uaioN wu van wq .(uedwo> .(q peyodv van an>qua0u uws!nap yomrw q9-8t61 eu!+M ualal soJs . n lal izoml uleJsma 'wne8ew xi+aCeJSm zebew q9-~t61 xua!v i+om~w suo ~aa-+%eJSmau Ywrseeew 9f61 al i~on 'vpe+i Iw Ws+aJeJSx. tS'!561 ape+ yam unsuaDl inn»u YunF'+z awe8aw'sw¢eYew pttp61 o!pu i+w+aau'uaJeJSm>u'swrse8ew ~YS>61 ...aGOI se uaaq n4 a8u>noa vw wd u>aq sey 6V61 zwW W]ui Y~Ie>nptl Rua1seN 8u!P- 1. . We gp61 . PaPJww pu w 0 8uniua..PV ws~eee!y >yl 8q 1y61 +P^oz41 Sp51 wo+l P^ !^J sw u^!lory9^J yyy u!uci uwa mfew +q rueu pue+q fq &+m1unW uo e+n8~ awos aP~no.J sanu! 8wa unpV Rum1eN Yws a.pe a ve8b w yK> av i 4m uu) m. n>y1 W&+nl Pe ~e1o1 ~+>9w^u laaa4l 99/62/8 5961 b9/6U8 116. >'//IH/N V96i N9/fiZ/N 9961 W/It6i ti961 a I ~aA I uaA
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m[advertisingebua,the[eble whereu'-a/(1-.)mdZ,.,-(1-r) 11(5,.,}++ :5,....+...). e =~ am bro~ ~ f nl e,gctoa mPn~„g ~ < d x ~rn . mnnaonF ol m.re:~ .he.m- rbe ew, ol a e o/cbrmd i'e preeent end pmt ebuu bn"drbefiereot~bemuke[pluebmdY'e o mwa br eenm brma n ehere wt [ [he u eheee olgood wWet Tbe e be Ibecauee oWerbrande, brmdeoftbe2~.! eq~Wledw<bemum[be bav.ng [ha e.me ehum ot W vvtieivg, bsve v all brmde ol We 5,... quelkd; e /ereecbw,OfWem ,p~ Wu maebueeo(Wem eeem v mvket abua mwte um mml. Thie ue tta buysn, he frevuoolj., Di m rvseo"wg WoevPDmwesem5mda.Tbua ba dacribed m ehoovivg tbeir ru bx"de edependevtlY a( put or (Y) H..,(R)H,,, + fi) edvmtieWg.Thefrvtiono'r<preemted -X,,,(X}d)+H,,,(Y-d) emtoftbePOpWaiov(beuwo[Eeevm Y-d) WbmdeofWeN.,leequJledmeevd N R H )} ( ( ..,,., 1()I) rvm ove+ ell bre"de W We E„/a ep -H..,(X-d)+H..(Y). one),mdt6ie(rmtiooxvWOU[etlr ~< brmde w pmpnrtio" to Weir ebw bti ddi d o"e o m A ng en reerrmg.vg, good wW. A uvilaural mue.ee iv e N.,(X)-MIH„dX-d) IevelofWvertiei"gxoWdivveeeeiu 1 (W) ol good will md tbw wveeae iu X d H ) ( + + ,., edvutisiogorimkaeowumme;bu[, wbicE nublubn the linevity ol X.- in ebv®ofgaoaxillxvebeatlooeberoe(i 5,., 6oldivg pml ehva ol advertieiee molev<le) of advertieing tLe in e n. Marmvu, rear.e"g- ebsre of gmd wUl x-eWd deWwe m p HY _ d w/ e l ehvm alBaoLwJlmmot tb a u (w) + d) - X,., ebere ol gaod xill depreeieted at (X) mplyivg [he[ 5... evd 5,., heve Ne eeme ~ F i~t ie, U tbeAbraod did vot ourket /u"cUOm, for Y~ f~ n. Thu °epWtl be We Poruon r of wba it 6 Wt uiod p aleo preWudev We pa®bititY W We wed . ' ntWS,.depmdu.govmmepeetvelueo( EuimnYe y yy SAencJ,Lfe.Mm ' brmd : e ebve o/ Wvertuivg. TLe mme be dmvd wbm~e pmPe+uee em b ror pu P~WOeu nt mYms4w. .LVm u p.et u d Wven;a" & i _. g em r ~~1.~-~kettuvotioofora d m }SmpY~ it .u .mmed Wet We d'uw^ tribu!ed[wev~dmu.areobWnedq +oBi..+ rB u n Y ~ ~ ~ demvmng Ii eromnn:aw; 1,'...",wbvo0~-(t-: g~o a~ m m aep a ~FOrpneR'amo/wulp.euti"v,mmumen' tbaeurupondinglormf~ ebrvol~ibe"uhetfuvc(ivnferePertl<WV 6heres ol ulee wen H,., - D.' } d2,., (9) velw by brmd publiebed
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Anci-Smokine Publicitv znd ffie Demand for 7oba<co in ihe U.K."
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6v- . ~ ~o,,.~,.,,..... . -.-. .__. .. __ . . -~cwy oF s:yA.rsu> .6r _o© /r..e./ad.F -^e~ 9 z 9EST COPy ~Nc .~:.~.s.. f.... .vr ds.....~.._ r.r. H. . ,y~ .~G as/rs~ ik ,~sr-us
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~ >,,...e.. E.,,.,,. _ . _ ...ee R. „ . e,rd pu -= Fee N n <m< m, . ~ ~ e - Iro1T4 rwunaer .u/.ni produetim<oe<w..<.we.wam - m ro moviug of l M ~ ~~„ °' ' ~ Wi111sm N/ohoW Rl w obWv ea io r:a~.~am~ mw..u~...an.~. Shoueeod,.eswrtmDmducMl/]7 upfied by lhe pncm of thue inp be bebit Immiug; tberelme the leve] cl Rl; ll; IR; 13. o obtuu e meu edW<iothegrevio leet c t per thoussod cigare er ymrwu indWed inWe demevd fwerion e thrm.yem moviug everege A ~ . rn. Tbu verubleS edeeu on em. w md wed to tru,q m <nt aem.od ivd uded eBeeu o( pmt prioa, ivder with 1934-J9 u u bue Nie ~ m. Wvv<iewg, ecd xa dom choiwe m vs /], 133, t1:,i)17 0 et de~.eod W oee r~u. m ro w+e pro~mioe cmt e.<wAea te...a.a a damd uolikely tbat euA e8ecu mWd be ing duriog We bae P<rwd wen Ibev m mnted eepmetely. p4M by the iadex ol leef coru b d m . Regrmvon pv.meter mtlmatm fm y- ,etm IN marglml Drotluc4on mrt ; 'oo (6) uegireo m Tehle V. Tbe atimsted duding tex for the yese< 1849-6d. Fedq m&uenu or edverWing, pr sod io erethwedded.Tbmetleueneh re rueooeblemdebouttwicethe~r inTehleVl. rmdard emu. Tbe ehon+uv sdvertiebg Flnd~, k wm ueraesery io mod eWYeity ol demend wu about .10, the eeletiomhip betwau the xholesel ebon.ruu Drim eimticity w'm ebout %S, end the ehmt-rm io me eWtiri<y wm ebout e penod. The me&rien ef .r..,.x lemeamtnovsdWt.6owevv,wumcomo ~ .. fmlebly high. The -meion fWed b Du' ysr yeeW T diet the downweu W rigvetumlmpn edWt io 1059 aod fhe wbeaqumt upwro m 1955 lae m m wm mvle fm the lergexde °uege- twem 1B52 ud~ IB51; it"L pmhepe uclc wortby that We r<gm®ov did yam Iqy lawling io l6Si, wme dcdine w Iffi9 teud leveling w IB55. Produebn Cm d<Ir1my<.~ vurmwo 1 Mugwei produeEOO ewt wm ueumod to be the enme lor eli breode md mt te very w+<ha~mstyproduead.Fort~m.ceblorte< laaa
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iBq sbvm e! advertieioe:ere mumecea m d'es a;Bbutl pse[ebvee 'me.u<d !,rma r L tDe eom averell M ave Lwmum Ibe' ~...~w~ p~pule tian e4 e L~. uWa~ or ~~ mWee w ued mepa . Se Z„!e p u ellomral »rD ebvs a un bot, eed oo eberq ew.1, mttbe~o ie~nd e did nm m.r. w. D.u[; M..~ oteWe.lewa.[- ter eigentb wee reje[W. Table 211 eboae w M[em inp euueu !b.e °eHmsw d tbe p..mebre abWood .vben mE~ e.eeWeui.W mllybYtneedvWitlngolb!brmdnonfit- a~.-a~+e&.+ra.,.~ : . p wn.meoou°,r„r +ooa+7P.J tet peea:wa m um. ma s..,r m eeluisamediammpuutlfmmdnu pebl~A,edivPn~de..(M'IBS1aodAduav/rp e~w rmm!wcu ieo~ ~031 wJI ° y m. Alr6 ¢b pr+ ... ea ~ sa. .~ nubjem w Weewvel bimee.eeani. !mt6 I(oYrk e9vntiom. Nem were nP. ..... - Di i d tl ""' um otlY o oe eomm se ntra _ by be pvtieWu r~qvm med bve. TDe ~Mki ' ma m~ amdr bbeNeeamem L.°beu~.... .mr .o[e ' ebveolWe-mvket tmetiom: T.nyw....,.... ome...mawemterb.e+,.mu. a.,~,....,.....- m.~ d e!mwmem,wY wmm~m;,e tD. e~m _ ~ o( deviatiom, ovv time md ... - - ov v ell br mvde w We mmple, end wve - of Drmde' mommb Wcm ~e~.aa.ro~~~meb muaa~w mem.. srmm e, ..... __. .uv . ysmellenvmdWa ' - ' .webwu,' emxabts,bW. .._ _ _ ovhee esofWmmdenermotadver [ui°B a! e PM4pM mu .ttt -.mt eetuded bmae wu romputed. e.... - The mmple ivelvaM lwelve b eipnum R'ets .ew rmdso(<ievetUeovertbeyaiod191B-03. .mm m tm a me pm.metrn d° ebareof-tnemvket foocdom mmo mede. Dotn pmioiy ent iodimted tbnt BR pueaot The mume~ obWOetl wbm IDe pmiod of oigeretb Pvrrbaemn' Ermb wvx deu.- 'vided Inu [wu peru, 1B4B-aa md mioed bY mvmet edver!ieioq md tLat IBYU-69. ere ehoxv u Teble II. Tee mtrY D.mde ehmee of Booa ni!I depmeisted Y! lo ex brmde (Nbm) betweeo t053 md g5 pmreot per ymr. Tbe porYOO ot bW IBSB mpveeuY mveed mm~mve` ebve. vedenm mm indiNduel meeoe e.pleined N.t4.mvke[ fonoion b tlift nmewhM, by a md r wu .bovt Bp perceut la botb lbendmeraWamdrwmereeno.Weio pmbyi.odgeewdWerwawenemall, -~ .n WM...~e t.e n tba o wne-elpJ6etpty diBerme tmm °°~~ bm~~°' eero evd r.ee sp[Ifimoty'dieerme fmm
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i ~ o pe /ly-.ntltn.,
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rArua~ute.s~ P. ' orodr(tFtP S n erpendt'wr< a tlpped r~ find gtM1.wtsLS.m.,la.peh esllan•uswspeei(~ more prer ' emple. peoPle nn.e evi~c~. .me popu6H n Ans eh w reduce tFe n 4ovnd. O eoo6netl ('f.R.C.)eenelntoewbae omt urthe nutnbersol cipure~ m5ectionslllantl I{"oe e~ , e eee<tafpublic , In Ais evanie Somve. revtl m smokinS A weRcie.... . 6 Sunnertornotin<luvina. elear a md':uDUt n•ni.e tnu ^ ^ x vu {SUaner's mvlvtis tl «ciparetu'ev Dr vde, the teend ro•'ne Rolal Cvllep e e~wn v~J p iehetl mt96.. LePwrPV ~ov PP . tesvcs30.,. . ~~~ Islvi v p n tn 10581. e
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51959 0681 P°e 9S-P :qnve°b awa wl ol pad», 4,!w ve4s pry,wlo a!urya wl v uual W°~ wl Wa ~14e!+as wenrya, ay, w u>dsv w sarys R,unpu! p 4!?ss9a w, v,14&, w, uo °w, W'J w, 4w4 ul o> ml raol w sualan W awyl aluxv, a,y v°!ysal le4> v! (CLl v! ,uedda atWUna a44,».eW o., wl P,pe we'/KZI We IEaI •ba ~I94ea 1a41 0l Wdw 44. veye prynw p 4puqa ap sryd 4w nyl 01 Waw+ sD!x qa 4knpm P dw.+IwNa wt a lenla u, leuw<veos WaavyOm»Iwm4w:leqawi'a,v4epry,ewt°ugwt uw qw 4,svpu! ploa o, rynba uoi4uYP k? ~ 4'0^l u°"^n.S 'w+J 44 a4, W as4s uY,ew a4s,o1 S vurava We a,ouaD a. ewe+weW 4uvDw rywl w sndw+411a+q®.tus°Pn 4,w,laqa wl Y'<+,s°Wi wl u J y4 P.'4o+ud sa8emw 8u!sn •eW P+wwnu ryw, w, m uwwv^J sum a4 sies.4,snPu! pWl nl pee euw,w+W wpaya p vays 0! mnW ve4a aa4,eu s,uu0 w! o11ew1ev a el Vou>a avu+ nl°>!M~ a w sxnPmd i w8essaw sqwpe p uywnv ayl i~Y a,wa Y~Y1/ w w0u.u w uw 8un'4 ,!.pe v,rynLa. s. 140 w, wVl wwute sn pl sixya 8u!BUanW 41 ~+q4 Wv J v».u,w vo!INa+wlBVUa%woa saepnw 8u,e!W.sW v! ,y p»~aovoa iwv4w, p vo!wnb wl m Ww+dde Wlwvy Guanbu~ 8urteww, °4e Mo44M Ww, awmm Moo® w'Wlav >q a w uq4wd awR wl me~ w'aeevrwv a4 444 Wwwa wl lplw s aey m v.pe leuo awl4slwwlp 4800 ^e44. tavow aww DwasOUw.(a4„N, Na4y vudae 4 W 8vuevw! [oNa tqa+ay, FvD w4,'aa'+noa p Yua88~u Smy,oN ,p,m Iwn!~ ~un a N~w a![olawo ry m 04y,ew 1»0l Rnpupo! 8mwle Sq • a W,~ w a!DW sno4,w wea, seuw! .G!sw vow swM4ulvP Foo!IeN s,ow4uls!D 1®vi ~ 1°°oneu nl.(uaw [q ,w~ep m8ewanpe wl wqdxa ol a1a4 Few fr>ryoaw> P,+os s41 'wwl 4asu o! uavad »d vow vism u 41 LIaM!I v 4 WeY uoue0 Da+ loo ap a{x sl.rodsod poo9+ww ve N! Mq t xll!PeJ levuawd a+ ,+e0 Pw+ WM Mo4, i° pa+! n&e~y+s~pw, p aee,uavd wnPuB!s e uo Iv,se.x a waw naDe wl My'>8essaw >eII~PeJ wl ol o,ne an!sudr> uv p,ulle vw ~. idoad ~M ~» -v II~~od a!Jvu e ipaJ9ws a..s x wipne ,sP wl8uuyp,mn,P>w ~ s.(es !vlle4l'sWu. .!>.pe s.~ a91 q Widape Bae val vpa°s P zn w„dlw,4, a°oa 5nw vuxWe .:.. q au,au! ayun j vnpo+a n! ol Wnm c>q ve ,e4, apaw wl x wpnape R°J B,ev w,0levo!n, V tlxdend poo8 pu va oyu Roaw w :. . yuq [pql.w! pnw ~yaw idmdP Wulnu w, eu!pueax3 vnpo,n .~ . m~18.4p W uaa4, vnW! of. Nawas!w,Pe >sl»?+ed e n41 DW4 ':K p aq, w idoad 8vav° awa+a~ryD ve va4! sary+ew ,ww w,vap r uw Yuwa, I»!,mwa w w!eww a,wwam w, wax +~+w, a W 8mys!Yw!p w slw, au41 M41 WnBn a4 asle 148!w 11 w ew4e!aw!p mwi ,enw emnyanpa •[aum6 c9 aanu°! N4enw? Bw ni>ew w.48 e e eu!Dwas eu!s!,+anpv w, avw (va m5 As°4 oP o4+a Ruw ve vwl MV Y,aaeasroau pe>, 'LWP We °o!4»iv pss.< ^4^+ suwnav+w ve va41 Rv,anba+l vs~e+ v°DmldnP iya4»m nµl, wyo vow pxaa» w fl!^ 9aoad auos m4 1W®sxwr.W w, o, Dasoa» ve oyw iaoad P n9wnu wt za>nw . T.++ inW4v wl ol aWm Mw!V.ppe BwpDV 'Ravmbul 8wswuw . oq. ewq,w 4>ev swum ol qq!aodw! ylevn q q aw!s nwu>0 w BmWads &!v,vaeW ol swnW 8u!4u,u!w!D w,snw vwl'nva+,wo a~n8+, e» Raoanbv) o, ns,nw 8mysw+uvp pl w ve wyl p mN 'a8+qwuw->,nwaaaauopuaswnsodva maauq auva~pP w, M4 lievs a, y>.e run ws w aw4 avo '~1w++1 Wa 4v>wllwwa~Ya.Pa>qra,yM e evms v>a.v,aq vuauyip >W.eo!Bnsol yv. pwe w q aV,p Otl s8o03ew vnw>ns w w,wv :.8mwmpnlawaqa> rei>apou We 8up!~anpe nwo new w>voda, `. poe n!Wn p,wwnu e e(wne IeS9611 vow~5 Wv!1°>p $i°awf , emql»speanpsawlao,auoCVUwlW JW!4Mwawuadvuevaaa, .~' msex n n ywarwa cawnro,j °, vmw °n wwP!» woe 4 wa41 sviW>dsnay,~o WN w, anw~xew w u os aio4> a41 ayew nwJ w4, awnsse ~qunlm a,N wayl ~,».xpq Aew a4 asnw avo4.a pBPny W J 44M ame tpw 8m,dwo myl u+eryJ Pvod» leyl •a8e+a m lawn P nqwnv wvo, a,elv GvanLa,l ilya'a8es»w s w+4 e w Pawd» uasevpmavlv!wal ~~~wnu>w! w a, a+ »0 a>vanb '°!A We ,yae > pe p nedW wl ~oP ew '\w+qSqualsmba4 voreaqwawpnau4,ornosYVU9uwaM 8u!s4+vpe M ryvas w w+nlv 8wsw,aaP ml vuapna qeaw ullo 4°° u&, a.w I.i wem ayl ,.°qe p+eo! w., t°a ,, ema
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N TAe d1o.<hwn Scnmt 27. Ib) n .oNactwedeigerc.as per Ee.d o( .dultpopulation iehr.e b,r'eooa c~e 2,t<qet um~pliooF 195gi. heraitCthe erranditwe s aFeom 1NU ic isbdev hat the tlvee rzries vnve broadl_v u tine iaef~er osellwia6 eabov te ,wsahe nd 6a espend¢ure o<euPieaeo Ntera.extaa roer....o« I./~-~r ojf4 "[.o ee as5umner~ao <ompaeNp equatio~n• BPS COP
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efe,rad~'.o aebped ,e wa mnk< abae 1 6rsa P pdea. rhe o~.<a m '. beumdvPa+mePda it Wmde, Tbe brmd wJd .apdea°eowdrase itb tbe erywuuoa x waJd bc mucbd , m abave thv I ted bttewe tbey a be fol4m.'ed (.vd tbe Iw of ell "IeeeL. ub ov tbq x-owd by d . m~aws~u ro.e mn xe w the vvrrevt periotl md iv ee<h psel Puiod aeuxva emumed,to.nample,rhetbeavd 2 ehere ot N< muket de evded v t p o u cw- Tn<SAOmytAeMmiH fuwwne vt edvoueivg relatin to thr to W cuerro! Folloxivg Cbwbeeliv avd Fellver, tbe edvntiaive o/ otbv hrmde bv~ oot ov the demaad br eecb of the 6rwde ot dgvette< dievibution af tb/e bul anwvg <tu otbv r[bepWOetvfaebare-Mtbe- rmde. (An dtemative (ormwviov, eln eT[fuvcYOVfortbebrodtim toW WbrmdfeWareolfil~eratlwtieuvw demavd 4or tha gaveeLL proivet ivBPaw'ra4lwoeofoo~Reredvertuivg g.nw. Wit sfi/mudiauaeedbeiow.) .,~X,,,P. (1) ~ewrtadevep~elY„vovgaeeumptiov. Siou Nme wex -o bendn iv brmd :b dma of btel advm4®ng ralerma b rebb I. Arumiog e givev dia. P<vded ov tbre ~ur ovV ThrewPLU4overvberrblvbedwitb b~g by tbet brmd md by emb oNV brvd eber of Wwridog b period /- m, wpye ~[begmupltwrrevmedtbet[Leebve- bi didvotveeeeseilyepv<16~(irtj),but abemuketfvvcuovtmhravdf,:- t, wh.mv.,eRm,wrtb<rmeiveveryNr,i. ~ Pbd on currevt md pM valur a( edvvtie- foe i- t v,.Ae<e &,.. - y.vd A diavibv[iov o( tbmn pvevbaea smovg tba fo.m ' rmda. Xr,. Comum<n' abvaNtbemvket hovtiov In . psrlieWV brmd wu expaetad w de- sbere y,., ~ tbe devund toe brmd: et time tba group, it :myf(el (1) tbet tbe eM1Uea(- n, X,,, ~ men' etveaf- iLamvket fuvctbv 1w brvd i(( R vbe mvk<t fuv<tion (or brmd < et tivx [, n) w' a[wev fwetiov oi beond i avd Q, - mmume. demsod for <ha gevenl <vrrev[ md prt sbvn of bml edvertie4,g, pmdav c(evetue. d(2) tbat, witWv W.y rapeet/ro ebve. lt wn nvvmed 1Set, xnd eY bwde o(-themvket 4voctlvoa, W qmtle b.d tba ebveivetbermePrim,iodividuJebwot rmeerc~eievlsoeiaed.i~hlbe4WVr tbe muket Nd vot depevd ov fLe lerol ot ef adv<rtieivg Iv s®vm Per+od. Th.[ ie, the tbat pite. A<bvoge iv l6< price of ell rwmptioa flmt ebvael~Wemvke[ (vvo dgsse[~m aHU~etl bW eigeretb pvrcbua, om deymded ovly ov rnpeelive ehvm af bu[ wxe usumM vot to aBev[ d'vevWy tb< advertieiog Implisd tba{ Ibey were o/ /be
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Ra COPY auaorobr .ooa o] rs. ma.vem u2aenr 931 .. (.IS) W Lnb) ...-m(,ml 'rol.tf) ei e .... . W (.d) .a (si) .otu .to tb . . m Lm) m (.ml . . Ii (.abi n (.Obl ouu..... .W (.m) .v (.18) .o i .& ] r. t~ui.w .m c.IC) .u mm ~~~ m(m) /bNd wa eigbteet6 r:d) LId y Peu~PMm~• .Y i..051 .b~ (.WI .m]6 . 16 igvettee. afoeomswmP.Wn'aP®dlytwr.mt;mo.oaeyen ame®tu.um.ua.aoubleaesehaa.es.- ame.o.• medmr.a~.c.alweas'.u~?em' ~:a.san~n.e,wrm~w+leoeb„.r.d :nWp ontime.od.pamthetemed'ubeueedto ]Lemedta6nd..ytlnaeBart.lm..mea). Wtbe PP~m.tereian.drvtiiKeF.mPI%' :It.qa to bEWn..nvmbe...of"ms.p ebe KA~ mm a rel.cn .d+wtWna fa We aemma wHe" (tbemeehs 40- to defioe): FYn- tunetiw wn besed tpwn tbe ida. Wnt mu- yloym®t of toW tig.rotb .daniluvy-lu ~eplb •/~P]dvma/veeYOUwaeurv.6omog' We merLt dem.ud lwetbn. ntba Wu '°t^ropWWN. ecaw wi(b n.Pect to al Wve]tiung: il We Warstiuns o! eeeL mdividust h]yd bu4eYW fvehlniYell~Pretnred to beeket- ropu.W>. wu Deeed ulron tpe eaumytbn W j, lt wcWd aill be paferted ll.li be.uas tLa .n lemum In we br.od'e edvatldry M~ o/ .ll yodueb aeubied tbe4.dvmeieiry; J aoWd aue the ].me iome.n in p~ueb.u. ] We nm~wn we. S]dtiJV wdiBamt be- bn . nueme EWa'g..oWV br.od u ft s-t.1, A..I em tm beeteaWe. be wuWd etill te in- ncWd mue lm. eoeremv ut tLe be.ea io- tw, m~tu ~euhr. •en uu. o.m e> mr~N lu .dvvEOU[I emad .IlleunWnew"ueee"mbnminddo(old LOO~°dt'. .ew .ei..nqrneeaer •°^°~•ettbepoe.lprodud. v,vw.. .ni`qy at ~ e Cigvetb tmoiaog ie gmer.lly bWimrod to
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ab1e7815 per(orma ~on u rtL ? uems x1iFM1~1•~ . , v,o~e le.el. rFe e.e.n~ tau •r,. \1. Co.'ctv'vox-s mted outtFattheinteryrew.nJ beF6u ngeroolLlx•..vhs.+acln.urreu andtha~,te(ae~,th. auJ L. Lm•:~dimt.d thav publiei:lhaJ e siveaLle eReei 9•uti~elefel o(e.ycntl:vure. C a~•dhixfieJinF•a eopeuu.e~u~u Joubteend tLavrclhertllHemmkeoneluna•ueLaaW Lo dra~o. . •mporw eJJ« wvLVlsa a.a:«t~n =vve•re t ~aNF.a~ ti~a .~a wssfl~a~a ~sax. •.ae co ~,v~~io~~« m_ se a/p.nE (ae.•ume pal:c.P~~ryo..o tl emport ~oughFinoreaus iuitaz~~~ nr lor~os o•iJ i o~o~mthev.v uahl .'.1 Cullert nllan teJ Fere aignifieanveRee oii cons~~mC.~~~e P fEesc. `d(aP;Sri,e.Rm
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_ether nitb rM1e e ~ nd~wre emf.lle xabz~.o isYp~ ~afur oscJla~wg about e ./o~...moF~ny nor i e~n<Dr,naMJor adcrro~ah.tA. .:i wueueeeandm/m~s<vmebe z ~ v inffe~ est9 n<16116t ~ Th< < ot<d,F ~sr. . tsamzf. , iuemndz.m.~a~rofrheeerinlhcmreWtim~. orv d;H<reottr<wln ohtnmetl for~.eiFht.nd (or vambers of 0o Ille.e exmm ~e the~.awts fortnumebera<of e Foreltee~and in b<m.mor<..i..~a£~c~ . a<rier ~ n>~ia,.i~:<.w~zmr.mgm.na~amw.remrcerfmm _ peadnar< s<n<zr<P<e~sia parrshemethod < Tn<C.5 0. o ~. he me:had. emrplof,ed~end it rstha.I~F i onfor~Fanae.i.nocfwli-oompnmble~ehh~h<o~FVs
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.1~~+~_mat~a ~elic+~ e+n<Lemo,aJorToeacr~in+ne['.ti . ~.~ ra e ~ ... . xoa...er. m und.<for ezqc+inF +here +o bezeu aPPc< ba nd +o che eFecmi. Ir~u .e.ponx a~AealrL c p.~uallOnec method of e:~ <u ne~nc...m .o ~PPer baoa ed annM1lnofcbefcrm T z IHAere A cof 6zm obulced eq R`r;~~.+naTi-m, °. xob:e a.m..Ae rrooi~, m. aiaerem.aoe> oi i n r m l~ner P Pre~rum~.q~„„a~~>~orea~.+r~~P,~~a~s~mPno~ousq!:
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u.f. of uge nrpom°z e`ea .e e dih. ef~t;~ of µ. ',a,,. Th va<a.f.n«).eio.wwr r<turo t.: r~°~~<<rp<e.~,<.<:. ,t~. Pubh<i ,tbe on:oIf this ie w,th<n d eRece of~publiviv~xons)tl eoyueoai'v o! cobvroo co.aumed ovSh <hun&<x in ib ryr of cig.rettesmoletl!s One c chv ninob t~ s~ Thls me~ be wtetl N~e<pi•elogoT`b~ tho pmpordnn odh(1r£rioTVbJ!*Shefreaultinseqvecions.releas etisf.ewrf~ rr k-..a a biehrrargraof uriv) <orrdatioa Tno voe~S<ien) ,nism,rt eod indi.vrs vn vAPer limit la= £ emds )o l(q,p) [ v rWovtion of one thva.n iho..e,ghe of wLVC.,. av ( tor.v.iltlej?(1~14WieetvosvekoFV.ebvm.davoawxvuds enr)x Thr e m113)-~I]),o]'ablen o(xflrr the ryum'ou`for P PPOrl/m,t,,,tn,s)
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ss ,t,m o-eoa m a=m.,m.r<~<. ! <x _ <ap...erwLt<T Rhi<h u zeeo until feGl tod t Illin •_+_= aSif.'=.9....1).T man ~o~tM1.otx~n~esen P'm=ae9 I 11 e_a- aF' -BfPr-<16D-. o>=-a-.. r..;-Mr.- „h=rr PPe =~ri<:<mhd<,.,~ioP nm• ~psor.n<c~it<e ~ ~r«artlmi (. s n<~mm~ ~certoo .:~ <x<~~, : o,nn ' xn/u~r ml.~nterp<eutiou of o:ne.=~eF..eb T pp 'diad«a xnnn<eL ~ i~prceUO ~ G a p a. 1 rra a< T m ~ e„«~« m, mvo m m< ma,< a fir z= S.m'ere rcxulu. ]'b< <s, i ,. Sumner opr.~tn=d :nipopulatio.npetllsa~ lead• zo :rnP et~r ~~s1e.PPupus(eoJLe toiv m<e~az=d. Cuv ~ma;wie in » o e~~pm< r rLe eR ~e P=opl:u( dv nnd<~~e:~ia~<<x~enterould onir~l o=el rc rhac <h=rReou Is ouK sp=oiPea,
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debmd erc bur'ioH we! breods m i[ mw<d e n o te b~wd•. ••prAemC utl«'• be m tM1e v rh 11.1 fum xoo,d m en d d e adv< BTM1edst' Profiegive at all fimu pu ~Nees g the eM1Vgiog the reme pnre TM1e bao18h 11ed [o be fnml pne woWd th end vp ea [he pn.'w b tbe r of Mverw briog <M1Ugetl by dl braodr. Tbe bemd xi[h ' ise prue paotitwee emoogthce brmde. lhe lownt `pWemd priee"mWd re nThese .mumptbm nubiiebed the tramo- u w thie level with the eipeeuuoo tbY eu pnce wewe nen .-oWd be meuhed bj oxbinere p g <oes' dwmd ch re brandee rhpmdmt e( theh Nvd brmde; pri<e iocreua ebove tbL abve o(themvket /uocuoo for thm brmd woWd mr be mected bmawe [hey w memwglW merYe[ demmd fwcYOO ot be mPmwtl w be lollowed (md w fm tbe gmerLL pruduc[ ciguo[tn. Aoelye'u thWme rnW[ in the bn ol JI "lemt cnvldtbmproreeddwg[EelionmuEWhed pevelvebrmd"<wtomue);priee<uu by Edxvtl CEemberlw M md WJliem t6M levd woWd be eryx[ed w be mem Feluer Iti. Tbe fint pv[ ot ihe pepv de. wdv whieh wndiuon lhey aaWd by d eenbm n obtimd /or w e pmfi[. b oo dam.e v~ dve to The mugwN pmEwb wet -,tion ehere~ol-[bemerbt /unetiom lor t brmd. IN cig<ratus br the period eiguettee m tumted w the eeme loe teco 19P63 mdnm oltbemer4etmmd bemde mdlodepmtlm[ ol q m4ty 0 v rel produ<t dgere[tn eigeretYi Etivg produced. Thu uu /unetion /w the ge /or the sema period. tbe woditiem whieb FelNer 14, Ch ehov:etl to be mceeewy Iw Chem Pr+cinp sM Advenirnp ealu[ioo in [he emW grouP <su 13, Pricing md Wv+sUdvg dedtlom by e~ i° ahieh eme pritt x'ould be tb meimedw toWedvertiupgwoWdehsrge.IOlhe d.mmdfeneueolartheib~evd , be kuow, but ebo opoe hea thu br.nd m , We me.nt Wet.11 breod: ed w We -&vm dva[iei~y. aeh noW tWr n ber i W i d g me o e Pr e a .dvertiewg emeodieore the[ i[ w<uemd. /oevduveetbePricebeiugehe.qeE de. TLa vd pert ot tye nm w d ~ The wumptiov [b.[ evmy brmd depecde ' hn m[ime ~hieb aould l wmumeeeho woWtl en co w elw.ye buy [be leut mpwe brmd powud mP~ tbu bypo[hnu. t w floeli e u m thst e cr e.. ud y.u WitiveJY eppe ' stiog enumptiom eon- i dtou, ri veh to rs nmivg tbe vewre ol tbe tonjxb'W intm (m deaeme)fv lu edvetieiog d<Deodonoeoftbebrmde. ' encp mLLdpsud reepaoeea it wu euemed Wet eech bnvd expeeud oJieed ee brivg eo Wge ty (1) tbet othm brevde waWd meot my prim meye yme !nl uvebk to Iv <u! Wel it might witisu ( okn W refeio mu4at ehur by inmmewg ed tbeir'lnet e<pemive bemd" [ype M ewpevdiwm. UNOrtuusWy, deu ere), md (2) tbu ath<r brmde wouN prevmud ntim. on a! eapiidt , I lollow It lo a priee iurrnn i( md oNy V<me [ue• but, ee u every bwd woWd me4e e hieher profit wbm [ba mmod pmt ol ihu work, et .11 brmde cbsrged [he higber prim theo eble- didootecGmrtoed wben e0 bnnde ehvged tbe lower price. vbich might bo mede lu thu
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so(boeh P.ona P.vee rialamrrelarion.~T i.red9rnurne RopelCollef.reporrnaJ r fr.a~er riwhinffro~,~eiF+ +c.esro pipaeo~deiFm:ml nT.b heeP+bliair; eRee~i, t.a <onmmN. R e~um m~. ro eon.udu nltememe ~mi6o+ro :Rar an Ti~efim olfrheurebums<omesh, R Hariable Dmje<red bP~56 ecer~a s.ho~ W.a m Ne p.esenr ease ahis u ele.asT~abe.oeR~ercorisofrhe nRhreiF~endiee~Fni6eanraran. wni.~a (sns. ahea kle.i,~a~ r e .e, i.rrna .s ioer r~r ~e~>~: o~u>~'m ivs. ,va Ivw-. rea~r~~oa ol ~ u.o .va ea £ifi+re ]. Ir ahooltl he routl rhae esen o~ iu m.ximom rhe BBST COPY P
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t m Pm< 0a h,mde beAev<e u u the auea ~n be eble to iucemce eAeir eAmr: m nvW' edvenuicg a eupav< lt is intwuvelY aypuliug ~Ae~ e eboWa uau e Iev tAm Pro 1 hy wveeeiue ,M1ev advmisiog oudaye. ehe muket u well u tbe eue o! eAe me<: u.Br .r.m t~.w N.ee md ~a • i m. .<~ <+a< x h .om< - - - - titr m..w m m<cr.ea mmmd.g iu <.>a ..r, e.aa e.re .e.a.~Peg.~<a..muwm<r~x.um.m ae, xmm< b< e~.e m ..wa b<m<ro<ea. s<moa, ev.v:,o.-. ... .~, ... si<to.<o-~eremm<awa.imt< e.n e.a W,. cm me <eee m a;<e. ¢.m tlut W ol ebe ^Ieut apmrive brmd ., __ , __ a( ewbm woWd he bet uWd Pri taw e.N c.ox s.u e.t< CorclWirpNde eiweir tA<mt o( P•iea aerivW .mumwg ,oivea in Ue ewar o( oLgopoirte oxt6 0l me rmwre liatea .bove mviaetl q p eimPlified ury5untty x]m w m aiQ -g ae iotl. For W< Yw IvlW the °••° w. ro.w~.uog m<vutmey m.b.e w io.mt P.<r<,e<a Pd<o eo.m.e~m...aas.aemuweeek b".`'meiemt.<y<.dwm.oaebmwhomq.' ~Ei1~ eeNel who~male~ ero.vueged 18S ~~)~~m~~e inrmtigebr b.PPmea4 t~thu ekce every year, ehtu Prim mti- pyy .PV~oe Sad in e Peet wbm d r O ms da ePPm< ro be in tb<eiebt reoge. ~ yjiy homogee<eow rodueY. Mem'mg f Lu4 /Adm+Nenp mvtet uemmd NccYOm.na ebu<dl: ereeb 1O°eket fuectiom em be aomuuetd. ToW evliing rs mdinus b ei P y g wue6el'mvattobemvuJtimm Puhemmmtimyortmtiy~.mumptiom ~ eepmtlitwu m tlme eod rysro ie eelMed 0°t91°g ~° °`turo of mp}eewrJ inteda med'uweduaum9aft'vrtvd].batlLe w°°a®me.nWW<W~m+P~mwpeueg b fied 9mtebie k°iO° a°ud°°° ud tlwYUOg rmpPyy wWm hu bem ewb1 ey , b Wvertldoydetltlom.. aee. Wen it weWL .Pau tLa bW eigu AEF2RENCP9 be.dvarauy aemaea bu wtich. me. 1 oPOtin wWa eSome; tba Lw it wcWd u>olleg u.2e ae..~e .ee uak eeer et w m ._ -_.. imPme. Ce.mu..W,Ee.uae,Tw.Tw..)u
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..dm„-amtrebama<maaa.r[e• 1 <rParterTame, aaiera=;aa,or ~z a senavamu m[erpre .[•o~Yaf e 6fe[ e s the met6od o de8ation foe r.ie5umn<TOb[nined p<revptitu expeodirur< by d _ 11 n£ed t5 ond o.er. ofttis~<ar nd<[erma~iwaFtnesp~ocit,~e&r~ I _ an(ina19581.e^~;ebpkodsto ngmo erealisediapopelat onleads[oeaia[prarement;nthcoeerav nded Periotl 19rt~-19 4~ xe e9uaa oo /iI~oTLe ezvima ed eHe=t n~ha[ smeller.antltAe Dvrb'm\\'atson 1 of)[obv=gos=o 1 `Eren e~lo,=eruiece&eiens fore?eo.er tAe ez:eoded s;me penod, she m„oim ~ F+rs[ly~<A s[ihrati•oo i.aQ,'en'foeidiA r ep<)=ificaa~onaaa N for che enaol a~bk eoJ g s af vgthos<g viagup smoling! r•.H=hshezpem[Fihe<<He=tptoshs.e diea a.ray o.<r time. Oa< ssibkFjustiEmsioo oould Ae Jthe eBe<sor she repan Aad bem w g up emoking.in wh;eh wse thxe m[ezp.e:auon ~6owe•e~.mwisAretM1 moLNg 65 uali.reaaetlamovFZhoserea<1FOFudul Footla([er~106'~If - .tlie, prcdic[ TaVnfa ahae[e~)a;meAOruon1oF s[thaefo~m<ho(PhbL.evrs o~d/equoiio[nlefimT.bki)
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51954 0]5N 11-1
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DV~STI ~CC)PY he Ro+.ItlCoueperepn va An~..S+nals v C9v~ v ~he Ix.w,W(or Tehvew+n iM C.A. eda/aergl9 wDle ro pevple~DVVg~ncFfrom Ppo~d st es lu'ichM n arc lchik tF aified .nd Ne - esafvhe RoDa.tdCOlle¢ereqn,e ovlJ - - Ital. e8eccfo[publlca1O~ 1Lror mple peopl<fihmers.. reh d+vn bronds v- ile smohin- ane , upper DvvMhe'ben tbe+.FVI< other hend. if publici~e le d. Ona reeeon Sumneedldfnc~aeonsdeeaFesre nspems~isaMrFe bvo6nM h.+narenaiva w the ezpendiavre dvu, lo vhis psper.e hv.e mR (S_R C 1 se~m (ar wba «o wnsumpaloo [b~ s TNSprondssinfrrmvrev ia Seevivmlll.vdrt\~weshov~tWbiv.IbmvewJOistinpviMmvre sleerl, the eHectc(pubticia!', n (m mede iaa o-eoa H~mo~- eep.~„omw. xn..°- t. o<por,.. ce the . x.ehd w tbe .hzenre of pvbhcrr .e oovM bare ezpMUtl cov. ce6um .equv coefficiev otlT udbisxsN donncards. Shereamigpi.en be prw1B63 .acvbv FepeelM uxed hemiu4E noflwomeal.moleneilibiuvo e tb+e i~ . abe wvel vu m per ne.a D..omea inre=- Dy w^ia Det.,~~r~ssl . ariesi ([5)~Tobledl. Ia psper.6umneruwmpaetl w vCo.-for vhis «na eb u Ooe m gaeofevsmg vheeTeRuC~d or mev vnd.xomev..nd ~seenon t :eest~mute IIPaE« 9u n Evs.vaxcec. nncm' a:v rauacna or ~rslt~I-1B:91 S 11, to~seo.vdSerhenumberxofregareue5eev umnee. i ci ad p Y voa l"'dghas _ ecn mp n m 1955).
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51954 076G I
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Am~.SmaA ~g P,dl~=ur v~d la De.wMlorTO[avsa,n me c.S. s?'o) .v . m ithe coetSmens rvr momeo maigoi6wv)~t .vd pvrzlT ^ m <6v'v . emgv o~em,-rn .r~e~[wie~~o~wbu[itTa n. comsr,h~a nrtm~ean;au,widei~,a~x ts preseoutl berc avgees, n pP hauvdtotM1elnllm FtotlS;p. .ppeortm,bel=tea.adiHerencea be[e`cen mev 1. diHerent !rom uro).nd (vr. opmenrla11,1 ~.homhi[ i~nbwt 0~451. Forpolie;purpues,th= o,d..de6niuconAVeion .eemato be H,ar hsd o[empornneR umbec of cigere[ua eon- vmpuon 6sa beev reduced aN.me pv0lieity wv aav mphssised <ha thees results wallginn o erthetesttlecade:mediareportv.g eoRmwvColl d /w repmvs, resv.ier.too. an W eenuwg, sn ev[).nuFamaFngosmyvlgvs. Th mpl• mea p . ma oo~ n•.[~. mor. e~,e voJCasn nnd8.L.5ssco
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trom indindu<I brmd asu io el<rtn ot tb< <yhnra emn. 8ioce oNy taoWiMe o! rSe v .. ....... .... ... .~~ ~...e~ ..............,....d.. ......... ....... .ut (.awl v<ri<bl<tiee witAio <.uodW devietioo d e ......... ........-.^ml.wo) iumem.WrurnWUwoWd.PD<eram.ka ..e~ss.e.. `••+•u...em......~.u /wetioovmaNenbyta<r<quvamrtty ` leaividua<b.reohWemuketlmetiomd'd !mi.l,~n,.bveGi., -brmdi'eebue /m ody witL rnpai to rve t o mvP W.<omtn .a.nti.ms u; wr oot e s!w t- wm mt rwu n: a. . r w w.<n.ie4 rd o ahwua ..d F,., . br<od 1~e mme t..n ..m<a e o151tn edvaztidog if 1 cr . Gitn ma o u!im.ud aa; mmde wi0 Lrge ebva .me,w;.<.aro<rumano!.maraee.m <dnr~.awwa!a,otepprrweet rnUr alEajevt trom mne n<.w~wr vmro•!+<mWr ww eb.r<s of eu s ed, md We ntimstu af 0<04/ wne abae brod 16oi.a wue deurotioea, - m emea md oot eigd6amly di9vmt }rom ammt.drutieing.) o! tba f TM~'"p1dle.Clpwea« u~sooo ~(.)ownenmade oo m IndiWawl Themuketdemmd!unetioetor bnod betie. If < brmd'< ehue o( toW d- w maud m bs e! tbe form vertiaog hed bxo aeting u e qo.y 1or s p,/N~ 1- e+ u)y A~ + BP~ s rofmver!Wogre ai~Gmn ~ ~ +vY~+eQ..JN ma..obWnedrpv.bty(rombrmdewiW -.p.<p,/N, -WODUedeofd9.ntta GverolYumieeieumv.oWdEae~e<udm aiaded by <b popW.LOO ov rio d<mmu ywu di6ertat /rom W e a A. . 3e ntio ol to W eigaratG md r eetim<ud /or We paup r< wbole d yW bautweg W el)prvdueu, P: Fetin<tn wme med< oo tLe beoe of da. .<Y nW) Pr.r per tlwue<otl eigueNeS. for We wbok P<+iod, f94B-82, bwme divi- Yi - tasl diepm.bk pmmeJ olmeP.;odmmtwoP<n<woWdL<ve .{a<dbymewpw<.looovmeqbua' ®rm Intlividu<I brond regrnmom too t<w nyEyyumykvertloor+dd<a oburv.YOU, SLe ntimetu obuwed /rom i.aothr<ofoNaformW<Iieuo/1S> mdi+idmlbmtlregr<.ion.mwellultm .<yeblr(mdbW..IKhWbil6m obWoed/orWepavPwbmaibnadeww . yhaYtimlutrooerqwdl6a wmuaoad m b.ve tbe rme a evd r, w :~y ~~,yb u r~ _ <bewoJoT.bleIV. ..,.. 4wJeILLIW...ti.ldeeyW r rCmaed Im me pvuP W edw/n m< L~~ii~ w`0wwwe~P.« t.~+m <[mdw <.~m a tm a me.,~ <sma<a 1[.i.ed..„,.,.,.u fmma.!.PmWvin3ewytotEeiodivldu.~ tkwn<tw<<w.w M.cd.FOrWeotbaoioebrmdetiWUam Iul~u«Wryrrw.,ur..nS ~pm r! .a m ~ nboWYyouWdeofftmewtenW.lbe dYpu.p4 a i v .p. ' 4d (or tLe pouP wr mte~o uedWerrorofUreo.ntimstNlromindi- rp<e..eowvn iea[.e[t[ mdtb<.numerl(orWepoopau .ae.mx withwooeeuodWnraroltbe..nuwud
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X w EC~ /. ~ Lo ' ~ ~ ~v--~---- ' AN OLIfAPOLY_MODEL OF TEE CIOAftE'tTE IbDUfi ' ~» OA'fON6CWaAeElc ~'~ ~ > a..mtv <11ue>wA F'or all merket /oime ihe theory o! yrica Iromwbichivtwtivd n the firm m l~m ot beme' m nwni uteNependm< taw pra6t mb}e aa a<lhe <ovetmion 'w eDY M tofollo• pa.¢dbyiu~wv(mctioomdita.etimatea Tk<Pramnmk u Wm /w<tiaa, Tbe theoriet wvai4y re gards tba con rwcYOO m givm md nkea ee It wee eemmad ebat, whev JI Drmtle ol eheprivuyslprobimtheePedEnYmoflhe t tbbeivgeoldtarlheesme price! m rw<tiw tagether with the be everyemdter< eve wdvded e lerge baWVral wumptiove il embotim .e to vhe vumbe<or vmmmen wbo xaWd sitvye buy ova a riva fi<me to <Emgu iv" the •L<kaet aayemive beaud a cigyaStee Id, 61, .nabin wbieh the ®ven 6em u ebk to ombn lerga evough lor We b.wd to eai.FOre.emde,emtor6memaybe mauh.oypriu<uhthetmightouurmd thaught of u comyrisvg vo o4gvpoly whm reiee pritt uvlese it e.peoted ell other it) th y at ove &m'e wtpuv debesnda u rvWx. FquJibrivm ehus taqv'ved mavded by otvevmen vvin vouembly witD that dl b.<ode be ebeeging tM1e same priaM a She pncn briog ehugeN md edF2evDricn aere <9vd. ehe grovp a'~Inel xpevdimrea beivg imrred Dy e.peveive b.md" covaumen might ehewe v firma Iv tha grou0 ea weL u wilh theirbemde.ccordivqbthebrmN'advei- ehavgn iv lhe pria md vlveN®vg o! the tieivg, m~ght edbere W eoma oM /avorite, or veo Nm, avd ia) the &m mskm Ue owv might ebwee thrir bnotle m<evdom. Thet yice eM edvutiaivg detluove ml Wy ov thu DrOprrty vug6t 4 widely PDtinbb u the bam or boa Na edm wJl ba eHeet<d suggmted by ]w 6. Bdv (a, tlbj. tlireetly by chnvgea it m.kn Dut eLO m It wea ummed tWt, whJe e<h.age iv wdieg ta hox ite eein wJl De eBeaed by tbe price IN YI uguettee would eHeet bW <D.vgrsiv nher&me'Pricn md W verfieivg egua te PvacDeeee, it wouM vo[ a9eet di~ ®pendiwre. ehat it npecu ehroe heme u teetlySth< dieuibutim vi thne pur<beeee mateiv<mpoaeauiuowvPdnmdWVe<. wovgthev.<iowbr+vde. ~<hoi<m.~ Av eEgoyob lhvmY mwt It wu aep .m~med tWt bW mveumqr ' evovghaPoCi(itvglm~mD~oMSbout ~memd In JI <iguatw dapmdedvyuv Yhevalm<athaeslnNmtime~mdWe WNvutiuoy.by.p,Demdeasjqwttu mbx a tba <oujeotmJ ivtpdeymdeero md mt m Wvarocvg kvde . ehe Jndi~ +e+atblehyDan.eeeroDad~e;e. adoa-m.maeaPU.<dr..Ad!adn+mw.p. -'- eee®m DmPe+tn al aoer~a p;amm webwg davmman - v<. "ue®b' d. ~. 1ea e nmog haadag oa eba c-wnw io w® a ad ^ ° a w ~ g ,,.ea a gaw wod ^a wa wa r,mesooe a sew md u<; wmd...re.am.a beivg ayvYly likely - eL ^iamm.5o,'~m nhab .d- ~~n:w<~a j•.,m.mu~Dd:eu~ azrYe®mteY md ite Prnavatiov wu env ~w ee_u_a®vgthe s.ma ivere.eeiv pureD.eee by ~ ..w~NUwo~e. m ia we n Y Wh v J. Ai N a ,'..bn n Pvd. ua°~w a u~mt< .uWUeb~ i '`{''Vzz n~ uwew aiS.~ • W N< t i. . 53954 0'l14
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, r ~9ege s:«, l n` dhox- weF oet6hangc ooa[ho zuppl. w bqv - x'hie,i .at3 ~~ zs .a Pe 4 on.iuner. . ai I i io it ire I o-t emm ntNO~ o- pe iv~ 1 edf.llinwnsumctionx'd n th o[Fe96" bend vW. eig~J6 m ~n (i9v) xi la[For x e di&ren[;inpeque+mionel9ll'IanJ11Drv'/[hePUbl'ait. nsipaificnn re dropped~ Tbe`"bex fi[~b[.omen x-esfeiren[A' On i 1nc ~pma[1og en upx.rJ [reM throughou[ [he period. c_, a iba Fh e elus , a~~i1 pxoi reDre~sPOn ~se oP evlnTabks. [[Ee Mnmxerd[rend.r~mFile e fo[~menPP[he[µ`[enJ beinsg^5",~eaher [M1Ur. 1lu nn~ ovex -o~t. -_azD . I a t ts o agreevi,h[he co~ielusfon[ha[[M eemznd bv'menis unrezponi
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51954 0159 1 W~.w+.~rv.a»..a.~e P~wmwo.r:nmwmw
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TM Alaulu.tte.5<Md .hi<h, roF<eher :ith rhe resulss ohwined using F, udie.ws vAa+ sh< a La„r~ blur eipann<s •vtl onehvd by srmnoem+evt wR Me moAmg puhl ~u0~. rtte wcvodeeep n5of vh<Ro,<at pe n.d oe6a~oo+.wo-.vd(vo>,ird.~s~uro~~n..rvc~i..oa ' we .ba~ m< re ve jusribm<+vn (ar Ne wowmeos ~epart in 1B8_ ttfie ~ otLU eipaurresha~mauaereasMtwmeS!ewl9asw?0;' str..~ i enrJ.wg on pramt II, p,,S7 COPl t o n oo.tn+i, d,.R<, _ p•eu<m h<mer ~.mroemwenmr~ . .~;oner. re pnn ? 'fa o[Tv.d bleushoxasM1 [reus.nlvl o.~h<numhee `„SumversT.efiabk, lficanrtrwd(ormeo o[eigerer.us. f veuethsvAe wrbdthefetlu uvitlenng eae>seiem r.walion + ~ SnsainJUn+tesviwte~~~~+voe+i+r < •ithv tne u e f ' a g ' ge ' +Pi -Tb ^f 4 T s . ( l i. - h. F ~a - b {/ 8 v po {+ - goi&e nq •vd +v+e n krFe. +mM eRed vA.v vl gg.e8 111 p.'e< eh.nFes-r« <gn. . ur+m<w h<.nh n.mpsien..nd nn." , .undqroher~feeronlsvehueAaogesonuheevppl. p t e~J~eaeernslnQet.lt M psndlwrndeu n' bt<T8 [3 prontles . betur 6r w ane daw (equaracv /el. tIn eutnr,heDwbw-\\'uswnavtisvlvismoremratsewr.thaomtAe on (a)- The cue&eleen o( TB 16 wdiuws en mpemlvmedwumAr)+ pmdouraofeB ~.FMchm.,rb. te>h ~ hSum- ~ed_tNee6eec iio~/+i.'si nnvvm. \[mm.R.•="0olingprvp.F.ntleascsssumeabFSumner tm~ Ha.~fertbe~puetl.' as respovsible ia .n apen qvesrion. ~ vo Fua supgesud e.rlieFr. vhe fact e Sum ~r~~eea. r~otnpnsb~,,, 1-1 ei, ea<a m,;..+~ae~ i~
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g T# ~ra~,,,., s~ ,)) T: di.coaunvoue arend: I, 19685 10.0 entl'.1.R...=otor1051.IT:... T s.Ta)5-fi m)TRE\'D:eaoaiauoue z? m)a,...a„rms aa.=a io> xr: mn...r .rt<ar. t.. ._ s ra, loea. lsw _. )s~o. tp)r aanamr4,~atwnsh4)arunr~~s,mawm.vroaammaar wut ass:nw mmumPeloa (57. 9 a wu olgare u aoo. ~p) on 5) g ~ a p p° oa Mulw: DortltSt. t o.w b.. a.nmru wh~foregn w •t tbl vg- abe m froe.d. a .e;u.em 4m c mro ~ px y . la tbe peris' upeuditwn Dy U: eU&.w 8owever mua6 tanign di uga5nan or6mnuJ 0c im44vwty ymn o! wow incWeiviab.e. •'fo,eigmm'~ ot o( theu auge. The wnod roseo nrob mar~. oa4 an«a. r«mm ~ almn4.i..y. p made .vsJobt< ta ahe b teofloaashkruadn ~ of We p.ckage (teeMalog ma,4eY «.) whieh ~ mmtme,.ad roable fo.
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51954 0sa
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>i954 0,b _ '
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. f,' Cen .rurs pls .Li..°uemsnam~owccommeLS",Th.ua,eamw ,l s ~ <w.°a .JO...nlofineRoy~t ts'i .P ~, ico . . . -. fnr xe~;+.Jaco~om+uo .°a o- . - (lllC .., % isl Toda. o. F.. "srarinic. or smakins m an. ed t:a edoni'. I col iel... co esn•+ ou+i•il Reaw•cA Popn .A'o. 1 e. ItN'nt. nn4eil IVri~". IhIRo~.ICollege [Phasidnnr.fi°~ath~pnxdHm/IA,LoinaonlAOC. ~~~+'II°"[°'~' 1:) Ro,a College of ri•'sleir.ns. S,noM'nv oxd BwliM1 .A..°. L~la~ ,6j L.TCw G~ f Rabi~: o( Ln~•e Sc°R" Bvisl, )I+diwlJmvunl.~t.renlu. AJ9 LAd xnn~wl AY Relnpse R+~ec in Tddicrim~ Pro,inmims ~.Jnrn cl nj fil PrU'..Ynnl.ii IEI D: d°mn~. e .~..
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5:955 0'69
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5195? 0764 raaossa>.[cnaie » aea>+e >a aWFa ~•>eas >ar•aaw c+a:~.r e aa a. o».noaae' ae'a a aaaaaa. ..eaaaw> c .efa' .e~a u. v.atsaa s a e~s
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.................
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51959 0~65
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/ 51954 0768
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51954 0'i"11 t.-apu. m•,~ ~i..eoetw%^r. ~~yNn~e a. aa tro.e
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519~ 0770 sams ao asvaxa~nsa p sv uzame ux sst "'•"••"-o<cz-szsf'avwwvanxw ._........ .._._._,__..,~..__..___.__.__.._._....__.._____ . ../
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-
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0 q I
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the muud T ~ b r a,edasbeiuq~ R,-)+A(W,iT,) (7) ... ... . I .ie6eProeeduredeve .bere R, - W~ ocey reull ris ~e.ea.n...a...mwn~..en....,-u oua i]7 m obuio m iod ~ouvna - ere at time , W, - f6e '^ew^^•w+^. ' u.~Poimaus o~Bue, o•'bolu.le prlm pu Wommd 'd r'M I mege' r.~~ a f PaL ma r. - aure .°B°nd e.me Drererred Dria. ntorarvu, w. Pnee Wd N h bi b at w epu i e e monopoliet wit6 produeedl/>/w DuviceotCalumbuubsemlexeepert6ou- ^'o ca a! ehae inPUU (I uod tigvttfee at ume / PBF'1Leee - e6e u_.... Wvenuiog, msod vi ;.,,~ -~ -- rmdb Dretvred Pr wnWd be Ne Prve Dm'vion. - resr m~r~ bveo~ ~ _ ~eemAydetvuilnedvenoro(lutmepr,ca, a ~ m i'e beee. Ni ' [he Priro l6ae We brmd .ouM Frtlo- all nvnmzM , ]Ilof odewe6uge,v6epri«f6etwoWdmeti- ,-~Lt+m.J'« elu~r Wtwa..od .a e iu fi[, vm tbet JI dmN snWd " (8) retbenm bechsrgivgfheumaPnz.Tbeemumptiom ~ or e mrs we mvme d omaeotma mw. IH,,,«(N'», - C,«)0~« - A,...i e ereu se c,nce. ''n^v nroducuov <osa: depeodena m<he begloob,5 0[ I6i. wDe+ w•6ve mr - tbe aDPmprine :be ve... tmu.aa . .. ... ...:.. .• . ... _- . .~ . ioures[ rste vvm.aoeceaeuane6o7 evaJeul6vbv.wtprAarredpr.xlnt6e -- - md [he reuu Price ' mig6[ emect fo rmWf. For thu R c. .o mWe wnu ee, lem[ epuvu mtimaue were 6ueu,M Wue• m a eha folloning: .,. . Prim wnu/d be e.iead u llJe levet raw~ ~e mmg,ual m[ of Fmdumg eye ~ ~ t'/' r. L N,,, wve mt ex- midee' .ntb v6e e.Pecudou ebat We piw wueeee ~ ~~ te r2mgv ovv me n w Wtl mt • ~ o •o w6lW ,oare -d he met; Peiw voWd mt b rsLed ebove ftie level beuvee tbe Dnod wiN We °Bmt the profif-mauuaeiog W„ regvdlaee mt pmlenM Price.ouW eo[be eapec'ed f'u b J. Tbe pro6 meumviog levd ot m•W,..e foma for e.ra af we ye.re tBaD-0a a/ouo.mwu,D~'oer.km.uWaweeiu [or e 6rmd (m hemd) w;w elevms ' . e _ .~ n 'tOUiee beO^•'^°'~ ~bwered tbuekvei be~ ~e0o yv reu o( 0% md f6e arpectatio la ` nv uee eII Price euN vowa be eryaut w ie ~°t e~e or t6z merke[ woWd vo lb t ~ a Dm. 6ed by va b de md Wie le 1M ~non u ebb wm ~ asvr, de ,edWtpoD"VboP, . I Drne WMnd wovid Aefa all [d .dver~itlK »Lave fe foYl.d: b de eLUp. .. ~'' Cipretu ket.6.er ..uevdmt ~ We-eomuma Dnm.WeR.md aePma' YMw .6 eu 6rmm~~n't..e ~I° Pe;row Iemme.oWd ew.b-m m tbmr avraoi IneL..od eewod, awumLiy .m ^~,'.;.~ reeca modnmee'=Bemetm ... ..emea ,•te: a~w m w«r:o~m.g ~x. w oean ~ w pe We mm. <mefmt /er eu 6emde a. dw.og Iwe-ea. arome v.~nee ..e ehaw,.m m me.u,bWdfum,b.evdebWiamti- .k•ylstNma.vemmiavedremomLM epenetime .rim myect w tmme m m lo.®t pervred w~. w me a mma u m ~ f f~ u . ° 0 m e&mda witS bi96v eeievent aumuPt raW ~ qi.u diemmt nu tor Ntme PmSb wnuW Drolvhig6m ewrme prion,e m We ume ror.p breode, ma u mmde a~mt~ [mt~~~ .o~ ~~e tivreem
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S 5:954 0779
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_ , .m paQlql asei mo+r 1'~sel m, °+aa a~9•r,•a dmmop-a ~n tt tl pv (oll waue e9et +• amtiPVVdaa vvmvw°a ie lam,Pipvad:a ma.%qm vov .ma~RVOdxaaoave9m na•era vov swao aep) ow•qmlo xapm, aalyd.~a,Ydm+.l.'"d "dl ~d 1!) 1f1 uv(011 aa,m6a> a malq•r+vn tvaPVadaP a9t+q s./91+° I•/ p.ry1am,ryuadx. uamvrvoa /o :>pN »isd,~>Ildml aq. 9PUBP . toaum, 1 .a,9eweqpl.u:a..dfY1 eyq°uon rvap-ap°t (51(Ip/'(°i/19) 59 -R .ovl r.ry 3w • !) !s ~DOI .vf.-~SGl+tp'+aJiolr (uamo.x fq'uau 6q) pamnwoa.nt>aeeia lo,aqmnu Ianwv aal•ma/rd'al.u:ad)t1op.:Mpamnsuoaw,wnenlasa9mnu (51 tsl l(PI'ml/ lql (9 PaPwp /vawo. 6q v S9) pa wapm lo t9a~a. 1. -(+i.ma) aad'alvm wtl) tlnp. aw ~98~aa .<q ooooa o» '(1!I Wv(011(19) 59 rypr.upml•1.Cq pp~~P (/ w.avv9t qPwV - al P.+ad),Ivpaasdva+vrPVadxada» 9w 1» wiC°~o.1 ruaP~ad:p [&lIa u• (s1 asel m uonemwu°a ww:.eia anma ae. y . •u o °r.+ofaP'Ya R) ~y[zll P~• fs19s 9Pr o„• ° ervl.aes z11l:.ta) Pv (sl sssl o~ ,a 'q patqa~a.. aHV uns sl ,a.o a °nef wv'.t 19 -(zllaavw.a.;st».m°°°naaoe°nolav.. r.<I' rnslor wol.. °~ICiI ..ei viuqa3rrpva•.Ga~~µmm.4ea+Yl01o>>*sw8rv.+vaJlill (d( s3 f°r°W r.. ~,°,+a~r rv6,.Y.rSd. ~,, + '*°N 4rrwH Wo [^P°°'['YnmR Pvo. 9611w4N3"1-O.V ,. oams w,wn aY. . _ Wr+ IS+t1
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. >1973 OiT"n a a~aPU Y. veri:a'.anaroNa6ueWlii'viao~m a.ms%n~
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51954 O~dO '.aan ri~ 3aln iile l~raau.aaen'.Q a waa.elv .a:naie ai .4Q a aa{e .rva. . a fra.n{raou ~a.msuoa ?u~
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51954 0'117 rnsp ecevs.nvssess.wss cn .cMen~esoscss:coat.ec.e
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SiS59 0]"/6 j
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51974 Gin2 ~o~a~ z a ~ a=~Fa~• =va w
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Kssa a'ras Nn ~1<a~n<s iate teny<ae[ti.ition ~<ne .e.<nee'oe
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51954 0775
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5'.954 C78'~ `~qooarp c eecw..eo.etne eoceiac~.eirna•c.na nuns a. ~
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51954 0"/d4 araa aaaal K aas ae i a w+xx a wx~p ow lo vme avl ~ ava ~ lo aaw,na p aa«. e y waa aui a9 e'xe`avananl xraxay /y'PP awa +e ,vlco Pawn IS . .__..... _... ._.._ ..... .... ....._.__...__.._._ ..__.~. _~
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5:959 0785 emttnesce•.m,nivf orsc,ete..aroteee..mf astseoa~,e,.<m ewyetecne.c vcn. tta smos^aesoertrosam wsts.
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51954 0188 vac> >u .ara.v..a ,a vaaaa neu sao(w ava v N oa Y
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in %~>59 G'/53 L+Si:on.l i gg
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-L
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•etua aya a...vs oauasavvwaai~aJS.rairsa'rurae=a.aaaar• aav a.v r4~o{.~. a av uu a s aaae sv 51954 0786
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53954 0]90 aa Rra~s'pqaao .asaasaaro(e~o..aaro ...orau.;aoo zaop a. aa esoaan Va(vnuoa' n»ars.f weVO...as aw fr rsuu. a ma•`a ra a i vaa ro(..a 7V~ orasano( .awoe ooa
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51954 0"/91 1 ~-„_..__-. _.._ __...___.._.._..._~~ ........... ..___._- _.__. `
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5}954 0192 1
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51954 O~S4 y
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51954 0'9ti 1
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Y o,~~::;~ ;::f~«a~;:~ Ya N.~ ~ ~,..: .o«" ':.a. ~ ~.~:'.~~,°:o'a`:o. ~'~.w,. .o., ~`:~~.. ,~.< o~ r,o `e~:~d"n:~ ~`°a~:~a`~`~;~`o~ P.`~~;o~`
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sis5< a'iss I
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>1955 agos ~
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10 51954 0"J99 / vcosr.o eae.utvereNeoo str ns oc [o.ceaNU ro evstne.. ~.o .ctbn mmea ey Ne lsal eour[ aecreet .emt Nat lugen xoceeover~ N. contlnwaguse aE aavect.eul~raM vT[s wWC......... o-eea Ne ma.or .uecesor
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~,~, ,,,, ~,,, ,,,6 ~,,, ,a - , S- ----- ,,,a --
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5i959 0800 a4a M pamea a ~ aoap aaas aya unoa io pauoaaa `a sj6lsi~V.Si I iieioa e• 13 ®a'Yaaa esauaa PaPSysaa'ue4..oa .,os.sa. .aaahe 3~aa Paiea P i.Iaa[aei
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--..,.. esc .. .. , a .. . ,
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52959 0905 ic nro.ae iza en auM z.v..a s,. .. oe a v v... t` wz. 17, 4
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IN 5,955 0807
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~ „_~~~~ __ -o„ ~ ; ; ~.~, n ° , ,~o, , ~ _ ~ ~_ _;:Ll,~ "•x,i~uw,~^u:~
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mm sasa oaoe
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51954 0810 m ova i[ ,a,a..wi~i r.+uwae euo .. ,as m.v. ew[.v ya . ..a .s.a. ma. ywwr. ..a v.y .c,a wr L-. . ,.-
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. `~aa ..',°• isu-ws ~ «..~..<.~.~.~ i.~:..~~ ^^i ~ r o~e~ ., ,. I ' 9 :. ~: ,o:j „~.. ;:po:. „ . ~~:' .--..~~: :""9~0~: : „~
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sissa oaia
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~ : .ta>, . <N: ~. a'ro aa e,: by ~----- -
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51954 -d16 1
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51959 0813
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s:9sa oa:2 o: s s ors~ su un ~a~;
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51959 0820
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lml~ 5:955 08:9 rtte ate aaea vn in,a .ae aoo~eievvo.~ea Mteao~+y.ec mio[ n`a uce~i w ea qcq izeac•[er avs:ovoaton`o[tcn. I
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51954 0822 >aaa Paa'eaa `.aamflaa naam ~. uava s.aa ~ a asa~. C
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f~
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~~[c`•1 S.-T-T95TTn~'~ilr~~en e. 193s. a.5er cee.>1~ 1 ss.ie~~ion~93
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Si954 0824 v.y V aocaaea lvaaoa.e ah. aa aaa.voaaa,o4.olasaliSwa laaovs aaaasl.o' a 1 v acp aa»o i awaaa~l+ i~ SS v lt Sb•o .. ~ poae .qaaava P,sSra.s aaaaa~Si ~ ya exaas vWe aaaa ya .oasai ia^oao4e.ai•a.a. V6uSa laaaaaaleuaaa[ul asP aaa a6av LSSaaa~.+a. wv a 5 aaaue~ S*w ayaVM 6u, oas a I z...... ya I P a a.an vn e•...... ...... . aya AV s lalaa. Seawas io _aeaSSy a Va Vala w56i L
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51954 0828 avail avaVaw ven, :ai o`J~.a xal aayao,µaPaawca56unt as,a.=rvx oa. a°a av. a~x3.,a n. aaa..ae oa~a~.aoa.
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Thc qualilativc r<mlls 4mn aY sa mad<k /all tXr¢ bssk syniG n„aran wi¢ simiiac wm<n h o¢ ¢asoo wc aonm <.arim<m.xn : aaailional <qumionz AO a a snow <.idenx d n<gasive eut~ corr<laliondthcreaNuak,wfiidkalwa9aaiR Glonlimal~NeP~~ oses addilioi, 4 tM post496s dummY miligatn Ih'n probkm aome ~ rn<.,,mri.m ,+lea .a:i::m<. « ,v,:no<sar.,:artlaanain,.ignm,anltt1n,~~<nnhi .::.I/vl. .d r.,am io t a,c :m.,a,n<:,nvrrn,ing .an::nk 1<~n i:::./ u ~<rmrma na<rc ,~a ar .,rn,am€. m<~ I~r m mn, aaifa< aml 11 ~ink rcacon w qusrun Ine a auonnl ~ola6 d aubs~anl,ol n Ins co ~ua r advc ising n< r.ssgnifn Thc buk dn. ap enadnn in all castts^s pruvidcd by Ine laggnf dePmd<m variabk The um4kg spttJ rion Imod<h IV aM I. VI) s¢ms sliglxly mpc o rM1e limar madd lmadels LI and 1.11} bul lbe doubldog s~ecion Imod<k 1.111 aM (.IV/ P<rforma <vm ben<f. Dilr<¢x<z m . ry frowm bnwttn IM modch ert maR M1ow< ealnath<modeh M1avin8lageod aav<nis:ng (LIL LIV, IVI} rnal variabk n 8emrally signif® L oinliw6 b tFe I,rcu a da aggM im of rliMUStryadversing n aldemaM.lnlheseequ vnom tadverYVi~1'snasignif aWe<anrertlM1CaumdlM1a.lwo <o<rlbci<ms for signif<sncc, aM fh<s ruts art pMmm<d in tabk QZ(1 On1Y in <q_ l aM 0.1h<<qwlium wilb ~61 prv<nl, do IM1C sums dtb< aa.<n+sins <o< cisms anain <+gnir na nm ag.ia anadam sing ouspcrfomn nlarive adverticing 11 If we look rhe•L IaH <nulls fw eqa 1 aM a a fa¢ value, we migM n sM1ar Iben n a¢lalian beMem mral cigar¢n adveneing aM Ih<sak of eigartnes. &a a namb<r deonsNnations munsd aution. Firn, IMrt 's the aitt d In< <Rxt Moa<I LIV iMiples a bsgnun adv<nisisy durziry d a bh usa> .n d.R kol: al <q. ) ana nnwa.n <I aM <) xwemng a eq. <. rb<s daalieiues em qun< Isrg<: N'v hsra m beli<se an iucrcax in <igamx aa.Misi~ d 1%«ouM pnaOM1aamumofmd<~mrmby-/ nfMWBmo.Tk pobkm is rM aimrc d nlsfivc adv<Ksiug m wlarroms absoluk advttlising Th< fam Ihal uMdbld +dvenkin8 wo<kd b<ntt IM1an deMl<d advensing sugguk IMt x ha.e ~ reslly <apue<M fne muhan<aus cyuations /nonkm. Sina cigarc~l< produ¢rs <m daidc loul,vsiuxl adrenein6 v:<.ouM calKn a tgMu mmJaflon nnaem asks and abmwn sdv<nisi,q Iban bnwsm aks ana fclarin advtnisine. cven f advcnising bas m imryn an ssks. Oo sh< olb<r hand. L aarensing dos inllu<n¢ sulq nlalise ad¢nising shonN perfom: bNln in demaM eslimafion Thc fan Ibaf absdme advttlising
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SiSSA 0829 .a9awe,ver s ranw,[Wau cecs[i/~svsaan [n. vs asvaneea
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51954 0427
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51954 0E30 . a.. ~ s e.~ama. a +w »a»sz ntao-+.a eva .w~z at 'a», a~ .•ewx~cY. » xc>.ei.fva tls
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~1954 0815 ot v".t:1 tssa t>os. m.r..~e i`y.c-'^~Z~~rlF' e~~7ZTS tvso tats ~es~95x n.iS~rv.~~ ~n~.v.-~v
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51954 063"! T? is:5 TtSi isT - ~ i9T YT.G ST-II:S
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51959 0838 .+aaaasta o,a artt-~t lii 6 rri3s_~tu _ a t aat
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.,;tw,,.. .,,,=; .. . ;4~ aff9'_w . ,,., ... ..... .... .... 1H
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~ LN A, 4N Ri; ~; ~
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i1954 0836 z[te alaal ' wt 4ain Paaexa. '
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c_1959 0835 , ltaaa.onlavaet<r o rn co(nctaen.wpt a.N+ w.M vaa- Mnor Ceto~yeatto spue[ aca~W(a<naac.ae lneece.ceatan 1938 by utoa-P(anea Irntcn raa w3a, aiong r.N tt<
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..3e ^[aeeo~e^aMY[~[e.cea eea. ..,oee~raoa., ie~~e ur roce.p .aVrc [atne o~tnec[ecana.sneue[renarteeco.c an t9sn [a 12 t/] ttil- 1n I96>. ocn c coauce~e
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51954 0842 es < Ssat 11 m t .a stJS~~eI'~i~e
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51954 o44 e~ ox ii va ` vaa", ioos s e,n.Wmloa va a,oaoa•o a=oroaa .oo ,ofau . e..aoo.aaa.a oaav~.eu K e ~ s+oa>~• ova r>sa>wa saaa. t o a
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51954 9945 Cf
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5'_955 OB anarMnls)o[ m lootam e:annetgarv4rea ia`>a o[nooar praws~li+eleexvii~st one quar[cr ot a11 . oa
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5!9s4 oa44 ` .ae' r v v i, a vso~ , e a aewzPa~aali»p p .a~a tcoz va aae's ' uav .z1e~°~ P aaaaa 1
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0846
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5'_955 0851 ~ i
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6 51954 08 8 ....__..._..._.__._ ,.....__..._._.__-J.
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51954 0656 Savava av aa.Saae . aev /+au aoSv.^aaySO^ayiwuai a ~u vode /q p_ n: av asav vea A.a:np i aa+av6a v+
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51954 0a,~
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a o n e. a.x zayaea •a ~aa v. a ~ eaaaa.vsez a:.e ..... F't zaseave. aaa a aeP auao . zex a. zea Vi.pvazRSeaveu.uvMapaa .~aw .x ava ao azo. tave tia p t .aaa aa va vt t.a>aaw aa>ex txaa aaw eaa .aavp ayxxt~ • aaaav? a~a aux
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va 1-11 .11,
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5:955 08631 1
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5:954 C8o
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51954 0859 apea a.e. atnc tsso-e eac..ms actent~oaa.avxeoe tocaaea
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51959 0858 'ta/.aaua wasaat,,.y ~.(e.~..~.a^aozaa.aa taara e.ztswaa teva( ovat(v wata.o ~aa.ap.a~... u*jata.euvazsvr s o(• araa•.roA. m vb.wva va r.av aa a,a'w /t>.~.oe atawa .a 'npo a a.(.., ~a.ts tar a mw.a a. sav( ( fa, aY•,v r.v.aasP.rava u[va 'zJSa~ .dua v xoie. va oa aa (.va w.,a ,vu~. . w pama,w se
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.955 oasz Y'aia.' aao' " a. eaVa a'pa'sev 'F,.rt na•o..a~ ea ueraroz raa zm^a,aoil, a aaaz ~JOap aseaeavx a ia[
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51954 08"
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51954 0866 .a a~aeaya.a ava'M a~jt+eawa v~ b. ca `p'eiaa en pa .:.. aq ay ~. .a xo x:aea .q par ea xa aaeaao.~aaoa. a.<o.ey av e.,x aama=. acn4 xaa+.>
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~ .?95G 0867 .ax .cn,evca « ty cwsc avee,,, av,.~.e~i,a . t"'
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51954 o96e .y._
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5'.954 0869 '.
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519" 08]0 aua aac.e ezsan>.aecaec{{caa{' .a aea aa•~ a.opaaaocacc ..{ ca~aP , e~ca .ca avaVS sac~ c' ca V' a....~u
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- .. . .. ..... .... .... .. -,-- - . --- .- .1 -- - .--
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y19s5 oa 4 k
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~.955 087: vep~amre nyr,a.e.aser awVeens~c ,~~xea Vxo..`rnere
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51954 Oel2
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51954 0E'I5 ~ aonn aa<v. i S§i. p Rd.~ •a <• ve:x. v txe. ue.en.. x+t< ue.v-cy r a 1~3nP<e is~ ~ tx<. u.,v<e~ xata w.v«:~av iw.~csiaiep' ~S~' ~._._~.___..._._._.. __..._.-....-__....__,_"`--.._......._...._........ ~
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51955 0877
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51954 Od76 e aa Y[>ss,~ a eUnaa>teuta a e ma.a.aapa a >^ .aata tv saauo avaa ~ arasaav.ote r trt svtsae>a so
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51959 Ob7B
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W-W~ 51955 0965 Secc ..i[ ee ae+[a .[an wrc [ r cn~p~.r vx. wnu
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51955 0879
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sissa oeeo e.,. ~.p...a~.~..'~,.,~... .P .,^.,.. . ~..~ ~,_.,~ P .n e ... S...a sP.F .,~ , .> P.. . ~..,~...,. .
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51959 0682
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5:95G 0881
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5i95A 0884 L
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~ 5:y5< p08t
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51954 0890
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sizsn oeas L
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5?95S 0692
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5959 0889 . tte ea~w.rt.m tn tsss-t tal •az r.y ae •
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51954 089i
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51954 0894 tu svattttel .... : +aa p t aoa - o aaoy,y to x af e- n en t~x a cas tizlsi6z/ 5 5
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5195e 0893
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1954 0896 s[i•xa rss "'•as Isi 9-1 I...... Iz 0[) a9 Z [i) . asu r a1z - a! sst i rl-~0 Is0 [. S[[[ • U i
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114 in (
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5.954 G89 ma a pe e~c .ec.aote. loel. .e .oacnts . eap.aa ~ntae.ccua[~y t s ves.eapNno. 9nc uttuce~tY asu e~~ ~R twe.wat mtu.c a[ q atc conswvt[on
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51954 0895 1- - - ._..
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51954 0901 taqoa • z.»s . .ez s~ c-t .xxswye . -)a ~ .xsxwqv x a'sxlQ /-.sei) 1x.xx) ( .xll1 i
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i
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5i95a oe9e L
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11954 C904
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.. . ..... .. . . ..... .... . .. . ... ..... . .... . .....
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51954 0903 /
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51955 0906 a ava va^waraavv vnwaauoaa~xaasvv av }va xvaw+ nxa ava p u yva a a v as ..p a a e aavos
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519,5 090n
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11954 0914 L-
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51954 0910 as ,..aa y>~ voss.a.+>woa .v oa spuaa taasnpYa ue asS.a w a . ~. saSdse asasa,eenaR.~ arla=....a.ea ra -aa sv v+sa'S 'a a•nSawaa> > asawwSaeaas eaveoae
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Ld <,s5< oy
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Si554 9912 -r.6 aaa r a as'~re ,aa.aa a'a t~f aaaoaeUaana.ew e a a a..oaaaaa ras'ua u'~a saaae . uaVw...... s w aa a `a a~aa r. m~f^VSSOeuoeasstaaaaeva aexaeerm a
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51955 G91"I xv, wzsxe.. ..an., xsx n, °r.c+.. vw xev vor.. e~ic~~hp sco~- vx. s+et..n. saceor. nexcca.vy cnv ovna~w.. - on.c...
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52954 0915 ~~ I~r naven, raa. wiv-.ay ~e-1'x58. S.'p~ 3>b~ P-Tf~'-Il1,Se u ov.si, xo. ~. ~
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5._954 09i8 aiR..'.c»~v . N>aa v ~ 6[aaV.a'oaaanvs.,jc.• v auf.. 4s. .~... Ra.~.a aVa. aaPKs.o>oane~xaaPnw~a o~ ~s 1
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51954 0913
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5;955 0919 1
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>1954 0920
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5195C C925 ~
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51959 0916 ~~ ,aars r aozi zx ~y«^s ~ c'w. ~issr a a a v o aum s n zx ._SC< <~La 'EIS^LO"" rr r aaa., ra +^ c•wwmfir •r...=x+ !~cx x aaavw -11
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51954 0926
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i Si959 G921 [,.va.<ayorNezare ~z.eapon .a .na`.ar[a~e o[ cm~uravei aneeeatseans aa~escre.cesrmceeev<rearraczany ~ ot
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Si954 0926
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~9,e'~"=;:~:~9 :~',;;® ~~:.~~`° a ~~. o~ e.:~~. c..c.uo~ veyoiw~~ns ~ e~ ew .a5o.,b.aw:eo~~ocan.en oaatae~ ~~ ~s wlaaaPry .`~at~it c4n~.ciare~ ~nae~e
Page 737: yex40d00
.<r te t t>t,w ..,< <~ m, o e,.oa.rtto. tft on n... eeeq u~nattmartot tne nnsoa ..do s e,~ xae e xx., v a r t[t tastou tne .~r o[ ..)er [s tet.ne Taex[n.toz.at~e newaeer ota.e5 rt.[n.~<ee^n ZZ60 6S6?S
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51954 0925 nc cnr: }~ect.ae, ssss, x rwxm .nu. naa sxta m xsaxce,~p«c•aVtnp, eaereqNeccsa[~ t.ee. aecea 1
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51954 G92"/
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59959 0929 '
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51954 0934 Itl vunv~.~
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51954 0937
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51959 0936 raa a wr.+tr vvt rr /el 1-1 orr iea a /r/ll iv' .vaA
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51955 0930 w~ a aen ~~a6N ~oi~i~ee~aeN.Wara'.wea o.e aa,v+
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51954 0933
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51955 C935 r.ac Imci~;o~s/ tixaltal cons. acama
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:'; .`..,.~".' ;'a~.>;
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11954 09'se
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_c1955 0931 mwe us i oas W• e i rg , tmmKn, a..ai eyim i ap tvct N~~ac,~ envacoxe.nt uaracterizea
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51954 0940 xax a7 wn. .e ~+x c x r
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5?954 0939 ~ e~ ~ +o~: xa 1
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51954 0942 k
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51954 0953 an~ aT~~ eis tsso-isoo. ~
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51554 0944
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>1954 0990' 1 ti a x P[ ax'jea,HaPUUO a[[ar. saau.a.l.4a W a apua Y aaVw aw e~vxa aa6u.xPeQOLYauaax.eae.,n.......
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519E4 0957 .~: ~s;s';: ~a~~;.zi:
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5195+ 0945 so .o . va <ee prel>ecret.o.. - ao. }usa ot c.ctes - euc ov y ncr cona r gooes a: ..ett. p.muccsacna v.~ veomp`raect v t` "aa etearty noacane .m.. veacn ~nw.^ac e.eat L rvaewtaaees eyevar.ou:ra
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51554 0955
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Si954 095e , )> >n<e~.-ja. y~. aac.p 65e waa~ *I
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51954 a948 ,oc.. r~~~ ~ra e~~~~ oa +.ra e r~au~ oa
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5:954 G9h- =»aaas~ a.~4 a -- +o~ vay >.,aiaoadw u v>s~.ev>
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51954 0951
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~~niu~~aoS ~ :""s ~ w ~ vave s~.nc s~ ~e~=a ~ ox au~ ~s"'~~~ ~~~oy rntv rt
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51954 0947 a.a err,a n`.v.es [or an rses ot ons~crYqwa:a ar~
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5tesa o95z
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51954 0954 [[". •tp aova ;[au+a•''sasrt+nu asayNe s[6~ asaf aW -_ xaas p e ewa spsn [[a eaxs a
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52954 0953
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51954 C96e
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51955 0963
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5?954 9 ~.~.-.____-.,..._~_._...._.._..._._.`__. . -_...,
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51954 0964
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5+554 056J~ tsi - ~
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51954 0961 x ico~a.r~v t. w x i.xpp x. i,wev xwAt ItsAS/. ~ ..1[:ca n~~xwe~, 41a7 p ji-- IMer A vn~e~~eesa. ssasl. p.~it ~'mn ' vi~ra~u.xt;y,~ ouan rAai:oT v io.x~. .'vcm`+iT;~-'
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:pR~SRR~~R.`RBasg~oEa€RR~~€RRBR : ----------------- ..~~vee„e> e e evo e~ ,. ee ~~ n pOeNpO e o> e Moe e veve~ . e ~~ ^a m..,..... me ., .,... m w.,~.~ . .. (: ...... o „ .a.. . ..~v_m o .. ~ . o ............................ e „~ R~*
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>1954 0950 awv NsRttt~ as o:`ra>azr+ sv. utaeuS.a. ' rw s n ~v~ ~t sut asar~t spw.s aa.msu t 6
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51955 0969 :f~e ,n tsiv, . e p are v~,a~., en ve rorrt , etn vty ~i e~ aavyc~a,~me o[ .na octa.rvvv pa 2erco nae
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51m -0 aa vrP s'axy) '+i xleasnP lVasa~Pwa oaacaw wamFy ~~. . ~.
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51954 09]? bululaaaaV,taan i~ ow! aulauaauYavi aiaaalwasaan i. an
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05]5
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ia 51954 0175
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5954 p9 3
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1 51954 C971 .w aay «er vna wrztvase lncrcase. ~ozeWz e. [elb.ea py vn99 .seem e.o.n~i vavl.ams ne uc Y .
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>_954 c5ao
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~i9>4 0990 N.
Page 788: yex40d00
5;954 09"13 a.r~ eo,aa~w er'arrr ara~'e ~w oa aouea,.ru,ra + o
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51959 G9]6 a vat~oa oa o-~a'r,.. e a zw b va an[,wa naaa~a ae
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Si954 09e2 uexax xaea /.aaim , a~'a'a ' N.i, Q wewa anaona
Page 791: yex40d00
51954 0977 lpnt<tauec~.y eneaes.w'peoaece~.ascuca,~<rn«<swa `t m}or~ a~ su<u« ~. a.w~s - auc..a w u<~.e. ciaa~a ~.y na,eacnar is rv ew~•c< `<e.r a.ca (_
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5.954 0984
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5195e 0983 s,vs. srcaocc,os`Pot~os oocescss .~ u. scc, t cstcc
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51959 09'19 an. sz c me . cacc ie,ee, s m«c[eaq ae az «cne~ uo u ..Y/•xts^•ns)~ame. • ce n,.. [.cma .+a ~ qnae w.ez. u: .iLe. u. a..x:a[a«s.a ae.,
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5195? 098"] cmnyev .m .o:vvxnw ,ieerevssouonot~,ve'pr .ac.,r..e
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51954 098 ~~[[ec[. ona[[.e w:[saet .nae ancs e•sc=. es oae m.ae recaa[eaecec<ciu es.a [ns. a.[[cneem.nes[e[ys.ex... M .e .a.e ey a crtacc enae .e neaa[c..ea.[t..` etg re.... poiac.euaa .aee~yer ..~aeapeectc. i..a.s:n.e1. aea uwse
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i19s, I98a
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51959 0986 aaa `a. a?a ^ee a oa aaafn~a aweaae5»+ ssaaaaaa e L