[mattmaroon]

"Advertisers must pay to publish ads, this results (indirectly) in higher prices of products and services."

Not really. This is the same as the "stealing causes us to raise prices for other shoppers" misperception. Supply and demand set the prices of products and services. If advertisers could maximize profits by charging more they already would be. Advertisement dollars mainly just come out of profits.

[robbrown451]

I have a problem with that statement too, but for different reasons.

Costs affect prices because if companies can't make a profit, they stop doing business. Under (near perfect) competition, prices tend to be a bit over cost. Supply and demand may be the mechanism, but costs do indeed come into it.

In many cases though, advertising lowers prices because if you can sell more products, the average cost can be lower because of economies of scale.

[manigandham]

Exactly. Advertising usually leads to more volume and availability which has a much greater effect in actually reducing the price of goods.

The cost of marketing (which includes advertising) is usually a small fraction of the overall cost of production for most products and services.