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Targeted Advertising and Social Status

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  • Nick Vikander

    (Erasmus University Rotterdam, and University of Edinburgh)

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    Abstract

    This paper shows how a firm can use non-targeted advertising to exploit consumers' desire for social status. A monopolist sells multiple varieties of a good to consumers who each care about what others believe about his wealth. Advertising allows consumers both to buy different varieties and to recognize them when others buy. In equilibrium, the firm advertises each variety to those who will buy but also to all poorer consumers who will not, so that they understand what having the goods signals. If concern for status is sufficiently high, then the firm will only place a single variety on the market.

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    File URL: http://papers.tinbergen.nl/11016.pdf
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    Bibliographic Info

    Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-016/1.

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    Date of creation: 24 Jan 2011
    Date of revision:
    Handle: RePEc:dgr:uvatin:20110016

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    Web page: http://www.tinbergen.nl

    Related research

    Keywords: advertising; targeting; social status;

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