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With a little help from my enemy: comparative advertising as a signal of quality

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Author Info

  • Francesca BARIGOZZI

    ()

  • Paolo Giorgio GARELLA

    ()

  • Martin PEITZ

    ()

Abstract

We extend the theory of advertising as a quality signal, using a model where an entrant can choose to advertise by comparing its product to that of an established incumbent. Comparative advertising, comparing quality of one’s own product to that of a rival’s, empowers the latter to file for court intervention if it believes the comparison to be false or misleading. We show that comparative advertising can be a signal in instances where generic advertising is not viable.

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Bibliographic Info

Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2008-31.

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Date of creation: 16 Oct 2008
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Handle: RePEc:mil:wpdepa:2008-31

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Related research

Keywords: Advertising; Quality; signaling; Entry; Competition;

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Cited by:
  1. Giri, B.C. & Sharma, S., 2014. "Manufacturer's pricing strategy in a two-level supply chain with competing retailers and advertising cost dependent demand," Economic Modelling, Elsevier, vol. 38(C), pages 102-111.
  2. Viscolani, Bruno, 2012. "Pure-strategy Nash equilibria in an advertising game with interference," European Journal of Operational Research, Elsevier, vol. 216(3), pages 605-612.
  3. Winand Emons & Claude Fluet, 2011. "Non-Comparative versus Comparative Advertising of Quality," Cahiers de recherche 1139, CIRPEE.

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