Strategic Targeted Advertising and Market Fragmentation
AbstractThis paper proves that oligopolistic price competition with both targeted advertising and targeted prices can lead to a permanent fragmentation of the market into a local monopoly. However, compared to mass advertising, targeting increases social welfare and turns out to be more beneficial for consumers than for firms.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 12 (2007)
Issue (Month): 10 ()
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Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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- Lola Esteban & Jose M. Hernandez & Jose Luis Moraga-Gonzalez, 2001.
"Customer Directed Advertising and Product Quality,"
Tinbergen Institute Discussion Papers
01-099/1, Tinbergen Institute.
- Bester, Helmut & Petrakis, Emmanuel, 1996.
"Coupons and oligopolistic price discrimination,"
International Journal of Industrial Organization,
Elsevier, vol. 14(2), pages 227-242.
- Stahl II Dale O., 1994. "Oligopolistic Pricing and Advertising," Journal of Economic Theory, Elsevier, vol. 64(1), pages 162-177, October.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Esteban, Lola & Gil, Agustin & Hernandez, Jose M, 2001. "Informative Advertising and Optimal Targeting in a Monopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 49(2), pages 161-80, June.
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