Second-best optimality of advertising when monopoly is sanctioned
Monopoly pricing is sanctioned by government in a variety of cases (e.g., patent policy). We derive necessary and sufficient conditions on preferences determining when monopolists choose socially optimal, excessive, or inadequate advertising conditional on monopoly pricing behavior. We then derive the behavioral implications of these conditions in an empirically tractable framework that is estimable with typical observable data.
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Volume (Year): 64 (2012)
Issue (Month): 6 ()
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