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Comparative Advertising: disclosing horizontal match information

Author

Listed:
  • Simon P. ANDERSON

    (Department of Economics, University of Virginia)

  • Régis RENAULT

    (THEMA, University of Cergy-Pontoise)

Abstract

Improved consumer information about (symmetric) products can lead to better matching but also higher prices, so consumer surplus can go up or down, while profits rise. With enough firm asymmetry though, the stronger firm's price falls with more information, so both effects benefit consumers. This is when comparative advertising is used, against a large firm by a small one. Comparative advertising, as it imparts more information, therefore helps consumers. While it also improves profitability of the small firm, overall welfare goes down because of the large loss to the attacked firm.

Suggested Citation

  • Simon P. ANDERSON & Régis RENAULT, 2008. "Comparative Advertising: disclosing horizontal match information," Thema Working Papers 2008-29, THEMA (Théorie Economique, Modélisation et Applications), CY Cergy-Paris University, ESSEC and CNRS.
    • Handle: RePEc:ema:worpap:2008-29
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    Keywords

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    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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