Comparative versus Informative Advertising in Oligopolistic Markets
The present paper examines endogenously the firms Ãƒï¿½Ã¯Â¿Â½incentives to invest in informative and comparative advertising, in an oligopolistic market with horizontally differentiated products where competition take place in quantities. We show that, in equilibrium the fiÃƒï¿½Ã¯Â¿Â½rms undertake a mix advertising strategy that combines both informative and comparative advertising investments. We further compare our results over the equilibrium market outcomes and the social welfare obtained under the endogenous advertising conÃƒï¿½Ã¯Â¿Â½figuration with the benchmark case, without firms' Ãƒï¿½Ã¯Â¿Â½advertising activities, and the cases of mere informative and mere comparative advertising. We demonstrate that the equilibrium market outcomes, as well as, the welfare alter signifiÃƒï¿½Ã¯Â¿Â½cantly depending on the type(s) of advertising that fiÃƒï¿½Ã¯Â¿Â½rms have available in the market and the degree of the market competition.
|Date of creation:||13 Feb 2013|
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