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On advertising durability and product durability

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  • Rajeev Goel

Abstract

This paper uses a simple two-period model to examine the behaviour of a monopolist who produces a durable good and engages in advertising that is also somewhat durable. It is found that changes in product durability and advertising durability have opposite effects on profit-maximizing output and advertising. Policy implications for antitrust and health regulation are discussed.

Suggested Citation

  • Rajeev Goel, 2007. "On advertising durability and product durability," Applied Economics Letters, Taylor & Francis Journals, vol. 14(1), pages 21-25.
    • Handle: RePEc:taf:apeclt:v:14:y:2007:i:1:p:21-25
    DOI: 10.1080/13504850500425550
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    References listed on IDEAS

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    1. David Levine, 1985. "A Simple Durable Goods Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(3), pages 775-788.
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    4. Goel, Rajeev K, 1994. "Industrial Location, Advertising, and Entry Deterrence," Australian Economic Papers, Wiley Blackwell, vol. 33(62), pages 53-61, June.
    5. Gregory E. Goering & John R. Boyce, 1999. "Emissions Taxation in Durable Goods Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 125-143, March.
    6. Dan Horsky & Karl Mate, 1988. "Dynamic Advertising Strategies of Competing Durable Good Producers," Marketing Science, INFORMS, vol. 7(4), pages 356-367.
    7. Dan Horsky & Leonard S. Simon, 1983. "Advertising and the Diffusion of New Products," Marketing Science, INFORMS, vol. 2(1), pages 1-17.
    8. Jeremy Bulow, 1986. "An Economic Theory of Planned Obsolescence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 729-749.
    9. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-149, April.
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