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Keywords:

  • I18;
  • L13;
  • M37

ABSTRACT

Using nonlinear time series models, the authors explore the effects of an industry-led initiative to have firms voluntarily restrict television advertising of carbonated soft drinks to children. They find that the market leader reduces its advertising to both adults and children and the second largest firm reduces advertising to adults. Advertising by a nonparticipating firm, however, increased for adults following the ban. The results emphasize the potential benefits and difficulty of coordinating cooperative behavior in this type of industry. Such policy strategies may be more effective directed at industries and not at individual firms.