Informative Advertising Competition
AbstractThis paper investigates informative price advertising in an established-product Hotelling duopoly where firms compete for shares of a fixed market. Prices are uncertain because firms' costs are private information. For a sufficiently low cost of advertising, advertising necessarily arises in equilibrium. Also, the less balanced the initial distributions over costs, the greater the potential for informative advertising. Moreover, whenever firms use informative advertising, it increases the firms' expected profits, and social welfare, relative to the outcome without advertising. Copyright 1998 by Blackwell Publishing Ltd
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Industrial Economics.
Volume (Year): 46 (1998)
Issue (Month): 1 (March)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- Uwe Dulleck & Paul Frijters & Konrad Podczeck, 2006.
"All-pay Auctions with Budget Constraints and Fair Insurance,"
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- Oksana Loginova, 2005. "Competing for Customers' Attention: Advertising When Consumers Have Imperfect Memory," Working Papers 0510, Department of Economics, University of Missouri, revised 15 Dec 2006.
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- Stivers, Andrew & Tremblay, Victor J., 2005. "Advertising, search costs, and social welfare," Information Economics and Policy, Elsevier, vol. 17(3), pages 317-333, July.
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