Abstract:
I examine how automobile manufacturers change their advertising strategies when gasoline prices rise. In particular, I use a robust OLS regression to estimate how gasoline prices affect advertising expenditures on vehicles with different levels of MPG. I use detailed data from the ACCRA Cost of Living Index, Adspender, and Polk's NVPP. My results show that automakers shift their advertising expenditures toward vehicles with higher MPG in response to higher gas prices. Fuel-efficient vehicles in large and luxury segments are more likely to be advertised in response to rising gas prices than those in the midsize segment.
