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Comparative versus Informative Advertising in Oligopolistic Markets

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Author Info

  • Maria Alipranti

    ()
    (University of Crete)

  • Evangelos Mitrokostas

    ()
    (Department of Economics, University of Crete)

  • Emmanuel Petrakis

    ()
    (Department of Economics, University of Crete, Greece)

Abstract

The present paper examines endogenously the firms ��incentives to invest in informative and comparative advertising, in an oligopolistic market with horizontally differentiated products where competition take place in quantities. We show that, in equilibrium the fi��rms undertake a mix advertising strategy that combines both informative and comparative advertising investments. We further compare our results over the equilibrium market outcomes and the social welfare obtained under the endogenous advertising con��figuration with the benchmark case, without firms' ��advertising activities, and the cases of mere informative and mere comparative advertising. We demonstrate that the equilibrium market outcomes, as well as, the welfare alter signifi��cantly depending on the type(s) of advertising that fi��rms have available in the market and the degree of the market competition.

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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 1301.

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Length: 31 pages
Date of creation: 13 Feb 2013
Date of revision:
Handle: RePEc:crt:wpaper:1301

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Related research

Keywords: Informative Advertising; Comparative Advertising; Oligopoly; Product Differentiation.;

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References

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  1. Hans Haller & Subhadip Chakrabarti, 2003. "An Analysis of Advertising Wars," Industrial Organization 0306002, EconWPA.
  2. Anderson, Simon P & Ciliberto, Federico & Liaukonyte, Jura & Renault, Régis, 2012. "Push-Me Pull-You: Comparative Advertising in the OTC Analgesics Industry," CEPR Discussion Papers 8988, C.E.P.R. Discussion Papers.
  3. Bester, Helmut & Petrakis, Emmanuel, 1996. "Coupons and oligopolistic price discrimination," International Journal of Industrial Organization, Elsevier, vol. 14(2), pages 227-242.
  4. Simon P. ANDERSON & Régis RENAULT, 2008. "Comparative Advertising: disclosing horizontal match information," THEMA Working Papers 2008-29, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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  14. Peters, Michael, 1984. "Restrictions on Price Advertising," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 472-85, June.
  15. F. Barigozzi & M. Peitz, 2004. "Comparative Advertising and Competition Policy," Working Papers 524, Dipartimento Scienze Economiche, Universita' di Bologna.
  16. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
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Cited by:
  1. Maria Alipranti & Emmanuel Petrakis, 2012. "Comparative Advertising in Markets with Network Externalities," Working Papers 1306, University of Crete, Department of Economics, revised 08 May 2013.

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