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Advertising Intensity and Welfare in an Equilibrium Search Model

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  • Ian McCarthy

    (Indiana University Bloomington)

Abstract

We analyze an equilibrium search model in a duopoly setting with bilateral heterogeneities in production and search costs in which firms can advertise by announcing price and location. We study existence, stability, and comparative statics in such a setting, compare the market advertising level to the socially optimal level, and find conditions in which firms advertise more or less than the social optimum.

Suggested Citation

  • Ian McCarthy, 2008. "Advertising Intensity and Welfare in an Equilibrium Search Model," CAEPR Working Papers 2008-003, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2008003
    as

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    File URL: https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2008-003.pdf
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    References listed on IDEAS

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    Cited by:

    1. Antal, Miklós, 2020. "A “parasite market”: A competitive market of energy price comparison websites reduces consumer welfare," Energy Policy, Elsevier, vol. 138(C).
    2. Ian McCarthy, 2008. "Simulating Sequential Search Models with Genetic Algorithms: Analysis of Price Ceilings, Taxes, Advertising and Welfare," CAEPR Working Papers 2008-010, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.

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    More about this item

    Keywords

    Search; Advertising; Welfare;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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