Persuasive Advertising and Product Differentiation
AbstractWe suggest a simple framework for characterizing alternative ways that “persuasive advertising” may affect consumer preferences. We illustrate the implications of our theory—and contrast it with results from models of informative advertising—by analyzing the relationship between the degree of product differentiation and equilibrium levels of advertising. The analysis suggests that a positive relationship between equilibrium levels of advertising and (inherent) product substitutability is consistent only with advertising that “increases perceived product differences.”
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 65 (1998)
Issue (Month): 1 (July)
Other versions of this item:
- Von der Fehr, N.H.M. & Stevik, K., 1996. "Persuasive Advertising and Product Differentiation," Memorandum 01/1996, Oslo University, Department of Economics.
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
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