An equilibrium model of advertising, production and exchange
An equilibrium model of advertising, production and exchange is developed. Sellers advertise and produce. In contrast to models where one side is often kept to its reservation value, both sides of the exchange are made worse off due to distortive advertising. Buyers read advertising, screen for quality of each good, choose prices optimally and provide a numeraire good (or money) in exchange. The total numbers of sellers of the two types determine the total production. The total number of buyers determines the total presence of the numeraire good. An advertising attention function adjusts how buyers pay attention to advertising. The competitiveness of the market plays a role. Advertising causes scarcity of goods which causes a price effect which is adjusted for. Search costs for choosiness are introduced for buyers screening for quality, which reduces the amount of the numeraire good held by buyers, causing less to be provided to sellers.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 3 (2011)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.inderscience.com/browse/index.php?journalID==310|
When requesting a correction, please mention this item's handle: RePEc:ids:ijecbr:v:3:y:2011:i:4:p:407-442. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Darren Simpson)
If references are entirely missing, you can add them using this form.