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EnIESEG School of Management ( IÉSEG )

Class code :



Level Year Period Language of instruction 
Academic responsibilityG.FERRIER
Lecturer(s)Gary FERRIER


Students should have a basic understanding of economic concepts such as demand, elasticity, consumer surplus, and econmies of scale.

Learning outcomes

At the end of the course, the student should be able to:
Understand basic economic concepts and apply them to the economic analysis of advertising
Analyze the welfare effects of persuasive, informative, and complementary advertising
Analyze adverting’s effect on utility under the complementary view
Evaluate actual ads to determine which economic view of advertising best explains them
Solve for a firm’s optimal level of advertising and identify factors that affect the level
Differentiate persuasive and, informative advertisings' effects on price, sensitivity to price, and sales
Demonstrate that advertising to defend market share is a prisoner’s dilemma
Compare and contrast the various types of signals of quality available to firms
Differentiate the role of attention in information-poor and information-risk economies
Explain the role attention plays on the effectiveness of advertising in the information age
Examine how behavioral economics influences ad copy

Course description

Why study the economics of advertising?
Review needed economic concepts.
Presentation and assessment of three main economic views of advertising--
Advertising as persuasion,
Advertising as information,
Advertising as value enhancement
Determinants of the profit maximizing advertising-to-sales ratio
Effects of advertising on price, price elasticity, sales, and market share
Signaling product quality through a variety of devices
Duration of advertising's impact and tax implications
Advertising and the economics of attention
Behvioral economics influence on advertising

Class type

Class structure

Type of courseNumbers of hoursComments
Independent work
Research2,00   Find and evaluate an ad.
Reference manual 's readings8,00   Reading articles and reviewing PowerPoint slides.
E-Learning10,00   Working assignments and practice problems to prepare for the final exam.
Face to face
Interactive class16,00   Four hours of classroom time over four days.
Total student workload36,00  

Teaching methods

  • Case study
  • E-learning
  • Interactive class


Assessment is based on three written assignments (30,00%) and a final exam consisting of short-answer and essay questions (70.00%).

Type of controlDurationNumberPercentage break-down
Written Report1,00330,00
Final Exam
Written exam2,00170,00
TOTAL     100,00

Recommended reading

  • The Economic Analysis of Advertising by Kyle Bagwell (available online through The Academic Commons). - -

  • Additional reading materials are provided online. - -

  • PowerPoint slides are also provided online. -

Internet resources

* This information is non-binding and can be subject to change
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