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Informative Advertising in a Mixed Oligopoly

Author

Listed:
  • Shaohua Han

    () (Renmin University of China)

  • John S. Heywood

    () (University of Wisconsin–Milwaukee)

  • Guangliang Ye

    () (National Academy of Development and Strategy at Renmin University of China)

Abstract

Abstract We study a mixed duopoly in which firms compete in advertising and quantity. The sum of informative advertising undertaken often exceeds that in a private duopoly, and whenever this happens the presence of the public (i.e., government) firm decreases social welfare. Surprisingly, the public firm may increase its advertising as the cost of advertising increases. Moreover, the basic insight that the public firm can increase advertising and reduce welfare remains when there are advertising spillovers, in a case with a foreign rival, and in an illustration of Bertrand competition.

Suggested Citation

  • Shaohua Han & John S. Heywood & Guangliang Ye, 2017. "Informative Advertising in a Mixed Oligopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(1), pages 103-125, August.
  • Handle: RePEc:kap:revind:v:51:y:2017:i:1:d:10.1007_s11151-016-9541-0
    DOI: 10.1007/s11151-016-9541-0
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Informative advertising; Mixed oligopoly; Social welfare;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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