Advertisement Size and Goods-Buyer Characteristics: Some Empirical Results zyxwvutsrqponmlkjihgfedcbaZYXW FRANKLIN G . MIXO N, JR.* The Unive rsity o f So uthe rn Mississip p i This article provides empirical tests of hypotheses developed by Phillip Nelson and others within the economics of information literature since 1961. Specifically, this study provides empirical justification of Nelson’s hypothesis regarding the size of advertisements for various types of goods, such as search goods, experience goods, and credence goods. Buyer differences (income, mobility) are also employed in order to test the robustness of these seminal hypotheses. The econometric results presented here provide some support for the notion that advertisements for goods whose quality can be verified only after purchase (if at all) goes beyond the relation of product brand to product function, and that the size of the advertisement does have important implications regarding seller reputation. INTRO DUC TIO N With the modern economic revolution, economists are beginning to realize the benefits of advertising within the market process. This evolution primarily began with the seminal work by George Stigler’ regarding the economics of information, and has been followed by theoretical and empirical studies by Nelson2,3, Darby and Karni,4 and Ehrlich and Fisher.’ The diffusion of these modern ideas has also been well documented in the economics and advertising literature.6’7 The purpose of the present note is to provide empirical justification of a hypothesis developed by Nelson (1970), regarding the size of advertisements for various goods-characteristics. Within this note, the general framework for testing these seminal theories, developed by Laband,829”0 Ekelund et al.,” and Mixon,” is maintained. *Direct all correspondence to: Franklin G. Mixon, Jr., Department of Economics and International Business, Box 5072, The University of Southern Mississippi, Hattiesburg, Mississippi 39406-5072. Telephone: (601) 266-5083. The Social Science Journal, Volume 32, Number 2, pages 207-212. Copyright @ 1995 by JAI Press Inc. All rights of reproduction in any form reserved. ISSN: 0362-3319.