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Comparative Advertising and Competition Policy

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  • F. Barigozzi
  • M. Peitz

Abstract

Only recently, competition authorities tend to agree on comparative advertising being helpful in promoting competition. They now encourage firms to use it. They reason that comparative advertising, if fair and not misleading, increases consumers’ information about alternative brands. For this to work, comparative claims must be credible. Competition policy and legal practice are essential in making comparative advertising (directly and indirectly) informative. In this paper, first we provide a legal background of comparative advertising in in Europe and the US. Second, we provide an economic analysis of comparative advertising. Here, we discuss the ways comparative advertising can affect market outcomes. Third, we provide an analysis of some recent legal cases in Europe and the US. Overall, we focus on the scope of information transmission through comparative advertising and on the way antitrust laws affect it.

Suggested Citation

  • F. Barigozzi & M. Peitz, 2004. "Comparative Advertising and Competition Policy," Working Papers 524, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:524
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    References listed on IDEAS

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    1. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-450, June.
    2. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 63-81.
    3. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    4. Doyle, Christopher, 1988. "Different selling strategies in Bertrand oligopoly," Economics Letters, Elsevier, vol. 28(4), pages 387-390.
    5. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    6. Pechmann, Cornelia & Ratneshwar, S, 1991. " The Use of Comparative Advertising for Brand Positioning: Association versus Differentiation," Journal of Consumer Research, Oxford University Press, vol. 18(2), pages 145-160, September.
    7. Michael R. Baye & John Morgan, 2001. "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, American Economic Association, vol. 91(3), pages 454-474, June.
    8. Logan, John W. & Lutter, Randall W., 1989. "Guaranteed lowest prices: do they facilitate collusion?," Economics Letters, Elsevier, vol. 31(2), pages 189-192, December.
    9. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, Elsevier.
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    Cited by:

    1. Emons, Winand & Fluet, Claude, 2012. "Non-comparative versus comparative advertising of quality," International Journal of Industrial Organization, Elsevier, vol. 30(4), pages 352-360.
    2. Dubovik, Andrei & Parakhonyak, Alexei, 2014. "Drugs, guns, and targeted competition," Games and Economic Behavior, Elsevier, vol. 87(C), pages 497-507.
    3. Winand Emons & Claude Fluet, 2008. "Non-comparative versus Comparative Advertising as a Quality Signal," Diskussionsschriften dp0805, Universitaet Bern, Departement Volkswirtschaft.
    4. Alipranti, Maria & Mitrokostas, Evangelos & Petrakis, Emmanuel, 2016. "Non-comparative and comparative advertising in oligopolistic markets," DICE Discussion Papers 231, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. Maria Alipranti & Evangelos Mitrokostas & Emmanuel Petrakis, 2013. "Comparative versus Informative Advertising in Oligopolistic Markets," Working Papers 1301, University of Crete, Department of Economics.

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