Strategic Informative Advertising in a Horizontally Differentiated Duopoly
AbstractWhen firms possess information about their competitors’ products, their advertisements may leak extra information. I analyze this within a duopoly television market that lasts for two periods. Each station may advertise its upcoming program by airing a tune-in during the first program. Viewers may alternatively sample a program. I find that each station’s equilibrium tune-in decision depends on both upcoming programs - thereby revealing more information than the actual content - when the sampling cost is sufficiently low. Otherwise, tune-in decisions are made independently. It is welfare improving to ban tune-ins in the latter case but not in the former.
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Date of creation: Sep 2008
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Informative advertising; Tune-ins; Sampling; Information disclosure; Signaling.;
Find related papers by JEL classification:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-07 (All new papers)
- NEP-COM-2008-10-07 (Industrial Competition)
- NEP-CTA-2008-10-07 (Contract Theory & Applications)
- NEP-IND-2008-10-07 (Industrial Organization)
- NEP-MIC-2008-10-07 (Microeconomics)
- NEP-MKT-2008-10-07 (Marketing)
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