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Strategic Underinvestment in Informative Advertising: The Cases of Substitutes and Complements

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  • Marcel Boyer
  • Michel Moreaux

Abstract

The authors analyze the strategic pricing and informative advertising decisions made by firms in duopolistic contexts. They show that, whether the products are substitutes or complements, there exist strategic settings in which firms keep potential consumers uninformed about their products even if the advertising cost is zero.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 32 (1999)
Issue (Month): 3 (May)
Pages: 654-672

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Handle: RePEc:cje:issued:v:32:y:1999:i:3:p:654-672

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Cited by:
  1. C. Clark & Ulrich Doraszelski & Michaela Draganska, 2009. "The effect of advertising on brand awareness and perceived quality: An empirical investigation using panel data," Quantitative Marketing and Economics, Springer, Springer, vol. 7(2), pages 207-236, June.
  2. Henk Folmer & Auke Leen, 2013. "Why do successful restaurants not raise their prices?," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 6(2), pages 81-90, July.
  3. Jeffrey Hyde & Brent Gloy, 2007. "Dynamic strategic responses among advertisers: the case of meat products," Economics Bulletin, AccessEcon, vol. 13(3), pages 1-14.
  4. Ulrich Doraszelski & Sarit Markovich, 2004. "Advertising Dynamics and Competitive Advantage," Computing in Economics and Finance 2004, Society for Computational Economics 61, Society for Computational Economics.
  5. Draganska, Michaela & Klapper, Daniel, 2010. "Choice Set Heterogeneity and the Role of Advertising: An Analysis with Micro and Macro Data," Research Papers, Stanford University, Graduate School of Business 2063, Stanford University, Graduate School of Business.
  6. repec:ebl:ecbull:v:13:y:2007:i:3:p:1-14 is not listed on IDEAS
  7. Shi Qi, 2008. "Advertising, Entry Deterrence, and Industry Innovation," Working Papers, University of Minnesota, Department of Economics 2008-1, University of Minnesota, Department of Economics, revised 03 2008.

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