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Equilibrium Pricing When Only Some Goods Are Advertised

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  • Witness Simbanegavi

Abstract

We study how price advertising of a subset of products aspects equilibrium pricing and advertising under low and high product differentiation. We find that, when firms sell products with the same reservation price, loss-leader pricing obtains only when differentiation is low. However, when reservation prices differ, equilibrium may entail loss-leader pricing when differentiation is high. […]

Suggested Citation

  • Witness Simbanegavi, 2006. "Equilibrium Pricing When Only Some Goods Are Advertised," Working Papers 035, Economic Research Southern Africa.
    • Handle: RePEc:rza:wpaper:035
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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