Persuasive Advertizing and Socialization

Abstract

In markets where consumption is socialized, persuasive advertizing can change consumption by affecting socialization, rather than taste or price. The paper develops an explanation of persuasive advertizing in such markets and notes its particularly simple welfare implications. The paper then presents evidence that the pattern of beer consumption during Prohibition is consistent with the hypothesis that consumption depends on socialization and persuasive advertizing

Keywords:

• Persuasive advertizing; Socialization; Bandwagon; Beer drinking; Prohibition; Welfare
• JEL classification: Dll, 118, L66