Advertising Competition in Presidential Elections
Coauthor(s): Wesley Hartmann.
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Presidential candidates in the U.S. compete by strategically placing their advertisements
across markets based on each state's potential to tip the election. The
winner-take-all nature of the Electoral College concentrates most advertising in battleground
states, thereby ignoring the majority of voters. We show that eliminating the
Electoral College increases campaign reach, but unmasks several factors that still distort
the geographic distribution of advertising. Using data from 2000 and 2004, we estimate
an equilibrium model of advertising competition between presidential candidates. In
a counterfactual with a direct vote, we find that all markets receive advertising, total
expenditures rise by 25%, and turnout increases by two million voters. However, systematically
higher advertising prices in left-leaning markets lead to 20% fewer exposures per
voter compared to right-leaning markets. Equalizing advertising prices eliminates this
distortion but reveals a funding asymmetry that tilts advertising the opposite direction:
toward the left. Recomputing the equilibrium after equalizing the prices and candidates'
financial support yields a nearly uniform distribution of advertising exposures. This
suggests that the Electoral College, advertising prices and candidate financial support
are the primary sources of geographic variation in advertising, despite extensive local
variation in voters' political preferences.
Gordon, Brett, and Wesley Hartmann. "Advertising Competition in Presidential Elections." Columbia Business School, 2012.