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Product Quality, Advertising Intensity and Market Size

Author

Listed:
  • Bing Han
  • Hayley Chouinard

    (School of Economic Sciences, Washington State University)

Abstract

We develop a model of product differentiation in which firms strategically compete in product quality and advertising intensity. Consumers face a trade-off between higher quality goods and price. Increased competition may lead to higher or lower quality products. Consumers always benefit from more competition as a reduction in price offsets reduced quality.

Suggested Citation

  • Bing Han & Hayley Chouinard, 2013. "Product Quality, Advertising Intensity and Market Size," Working Papers 2013-12, School of Economic Sciences, Washington State University.
    • Handle: RePEc:wsu:wpaper:chouinard-6
    as

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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/chouinard/wp2013-12.pdf
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    References listed on IDEAS

    as
    1. Naimzada, A.K. & Tramontana, F., 2012. "Dynamic properties of a Cournot–Bertrand duopoly game with differentiated products," Economic Modelling, Elsevier, vol. 29(4), pages 1436-1439.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    advertising intensity; consumer surplus; market size; product quality;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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