Market research and complementary advertising under asymmetric information
We consider whether market research can always increase a seller's sales under bilateral asymmetric information. If a monopoly seller provides a high quality object, market research cannot increase sales even when the cost is sufficiently low. A low quality seller, on the other hand, can likely benefit from market research. However, this research has shown that market research alone does not improve sales and that advertising complements market research. Thus the high quality seller can increase sales by using both methods. The availability of advertising and market research to both types of seller results in disappearance of information asymmetry and efficient trade.
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- José Luis Moraga-González, 1997.
"Quality Uncertainty and Informative Advertising,"
CIE Discussion Papers
1997-19, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
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