Although advertising is often the object of much disrespect, it nonetheless plays a significant role in the economy. For one thing, it helps consumers find out about new products, and new products have been rising in economic importance. Therefore, this relationship between new products and advertising makes it worthwhile to revisit the economics of advertising. In this article, Len Nakamura discusses advertising’s role as a productive economic activity as well as its value as a long-term investment and its role in subsidizing entertainment, such as TV and radio broadcasts.

This article appeared in the Fourth Quarter 2005 edition of Business Review.

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