ADVERTISING AND THE THEORY OF CONSUMER CHOICE.

This article examines the implication of changes in advertising on consumer demand within the framework of Kelvin Lancaster. The major advantage of this framework would appear to be in dealing with the question of advertising, since advertising about a product is not merely giving information about the price of the product and the fact that the product exists. Instead, most advertising is directed toward emphasizing particular characteristics of a good and deemphasizing other characteristics that the producer feels may inhibit consumption. In the conventional framework this kind of situation can only be dealt with by changing the indifference curve between two particular goods, whereas in the new framework attention can be concentrated on the actual direction of the advertising such as emphasizing a single characteristic of a good. The importance of these results is fairly obvious. When there are two goods, each having a comparative advantage in producing one characteristic, advertising should stress the characteristic in which it has the comparative disadvantage. This will always be more profitable than advertising all characteristics. Furthermore, the Lancaster framework permits us to analyze conceivably price and characteristic changes in products without worrying how the indifference map is changing.