Persuasive Advertising and Product Differentiation
AbstractIn a Hotelling-type differentiated-products duopoly model we distinguish between three alternative ways that persuasive advertising may affect consumer perferences. We illustrate the implications of our theory - an contrast with results from models of informative advertising - by analysing the relationship between the degree of product differentiation and equilibrium levels of advertising. The analysis suggests that an 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 InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 01/1996.
Length: 21 pages
Date of creation: 1996
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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DUOPOLIES; PRODUCTION; ADVERTISING;
Other versions of this item:
- Nils-Henrik M. von der Fehr & Kristin Stevik, 1998. "Persuasive Advertising and Product Differentiation," Southern Economic Journal, Southern Economic Association, vol. 65(1), pages 113-126, July.
- 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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