A note on measuring returns to generic advertising in interrelated markets

This note focuses on the theoretical relationship between price and generic advertising when supply is uncontrolled and markets are Interrelated through consumer preferences. A key finding is that the mutatis mutandis relationship between own-price and own-advertising is indeterminate unless the structural elasticities pertaining to own-price and own-advertising effects are greater in absolute value than the corresponding cross elasticities. This implies, inter alia, that benefit-cost analyses based on single-equation models may overstate producer returns to generic advertising, a conclusion verified in the empirical application.