Advertising Has Got You On The Run. Well-Being, Consumption and Leisure in a GE model

This paper presents a general equilibrium model where rms producing the consumption good in an oligopolistic market purchase advertising in order to increase their market shares. The model aims to evaluate the general equilibrium consequences of such a behaviour. It analyses the eects of a taxation of advertising on demand for the nal good, on working time and on individual well-being. We conclude that, unless the direct eects of advertising on utility are strong, a positive tax rate on advertising raises leisure, reduces consumption and increases well-being.