Publications [#48482] of Stephen E Weinberg

Working Papers

1. S.E. Weinberg, Advertising to Overlapping Generations of Addictive Consumers in the Cigarette Industry (November, 2007) [pdf]
   (last updated on 2007/11/19)

   Abstract:
   This paper documents the importance of consumer persistence in the cigarette industry. I employ a novel nonparametric technique by McKenzie to show that brand choice behavior in the cigarette industry reflects strong cohort effects. Using a conditional logit model with pseudo-panel data, I show that smokers tend to stick with the brands that were popular and heavily advertised in their youth. I further show that advertising and prices have stronger effects on youth brand choice and smoking participation than on adults. The combination of responsive youth behavior and lifecycle persistence creates a dynamic trade-off for firms (and thus policy makers). Firms must balance the future benefits of attracting today's young smokers with lower prices and higher advertising levels against the current profits to be gained by focusing on the adult segment.