Advertising and Pricing at Multiple Output Firms: Evidence from U.S. Thrift Institutions
Abstract
We derive five hypotheses model regarding the determinants of advertising and deposit pricing from a structural theoretical of profit maximizing depository institutions; we test these conjectures in a simultaneous system of deposit interest rates and advertising expenditures for the population of U.S. thrift institutions between 1994 and 2000. Our data contains ten different deposit products being sold in 666 different geographic markets. We find support for each of our hypotheses--branding, information, Dorfman-Steiner, structure-advertising, and structure-price--with the strength of the results depending on the attributes of the different deposit products and the characteristics of the various thrifts.