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Abstract
In this paper, a two-equation sample selection model is used to estimate a household
demand function for salmon incorporating domestic generic advertising. The twoequation
estimation procedure, based on purchase and unit value equations, allows us to
handle heavily censored panel data for salmon purchases by Norwegian households and
the quality effects simultaneously. Unit values of the aggregated salmon commodity
calculated from the observed expenditures and quantities are hypothesized to represent
the average quality of the purchased commodity. Advertising effects on both purchases
and unit values are investigated. The model also allows us to separate the effects of
conditional purchases and purchase probabilities. Results indicate that most (78%) of the
advertising effect is through the change of non-purchase occasions to purchase occasions,
and that generic salmon advertising induces Norwegian households to spend more money
on salmon. However, advertising causes households to select more expensive products
rather than increasing their purchased quantities.