Second-best optimality of advertising when monopoly is sanctioned
AbstractMonopoly pricing is sanctioned by government in a variety of cases (e.g., patent policy). We derive necessary and sufficient conditions on preferences determining when monopolists choose socially optimal, excessive, or inadequate advertising conditional on monopoly pricing behavior. We then derive the behavioral implications of these conditions in an empirically tractable framework that is estimable with typical observable data.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economics and Business.
Volume (Year): 64 (2012)
Issue (Month): 6 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/jeconbus
Advertising; Excessive advertising; Monopoly pricing; Optimal advertising; Social optimality;
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