Generic Product Advertising, Spillovers, and Market Concentration
AbstractWe examine the decision to advertise a homogenous good. We show that the likelihood of inefficiently low advertising rests heavily on how one models the mechanism by which advertising affects demand. Regardless of this mechanism, however, there is always a lower bound of concentration below which no advertising occurs even when welfare-enhancing. In such cases, mandatory programs will raise welfare if they induce entry, although producer surplus may decline. Our model also provides an explanation for the stylized fact that advertising intensity first rises and then falls as concentration increases. Copyright 2008, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 90 (2008)
Issue (Month): 3 ()
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- Gomis-Porqueras, Pedro & Julien, Benoit & Wang, Chengsi, 2010.
"Pricing, Advertising, and Market Structure with Frictions,"
25942, University Library of Munich, Germany.
- Pedro Gomis-Porqueras & Benoit Julien & Chengsi Wang, 2010. "Pricing, Advertising, and Market Structure with Frictions," Discussion Papers 2010-20, School of Economics, The University of New South Wales.
- Demont, Matty & Rutsaert, Pieter & Ndour, Maimouna & Verbeke, Wim, 2013. "Reversing Urban Bias in African Rice Markets: Evidence from Senegal," World Development, Elsevier, vol. 45(C), pages 63-74.
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