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Non-comparative and comparative advertising in oligopolistic markets

Listed author(s):
  • Alipranti, Maria
  • Mitrokostas, Evangelos
  • Petrakis, Emmanuel

We study firms' advertising strategies in an oligopolistic market in which both non-comparative and comparative advertising are present. We show that in equilibrium firms mix over the two types of advertising, with the intensity of comparative advertising exceeding that of non-comparative advertising; moreover, that the intensity of comparative increases relatively to non-comparative advertising as market competition intensifies. Interestingly, the use of comparative advertising may lead to higher consumers' surplus and welfare in a mixed advertising market than in the absence of advertising or when either comparative or non-comparative advertising is not present.

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Paper provided by University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 231.

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Date of creation: 2016
Handle: RePEc:zbw:dicedp:231
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  1. Bester, Helmut & Petrakis, Emmanuel, 1995. "Price competition and advertising in oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1075-1088, June.
  2. Monic Sun, 2011. "Disclosing Multiple Product Attributes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(1), pages 195-224, March.
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  4. Anderson, Simon P & Ciliberto, Federico & Liaukonyte, Jura & Renault, Régis, 2012. "Push-Me Pull-You: Comparative Advertising in the OTC Analgesics Industry," CEPR Discussion Papers 8988, C.E.P.R. Discussion Papers.
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  6. Mohammad Arzaghi & Ernst R. Berndt & James C. Davis & Alvin J. Silk, 2008. "Economic Factors Underlying the Unbundling of Advertising Agency Services," NBER Working Papers 14345, National Bureau of Economic Research, Inc.
  7. Insuk Cheong & Jeong-Yoo Kim, 2004. "Costly Information Disclosure in Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 121-132, March.
  8. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
  9. Hernandez-Garcia, Jose M., 1997. "Informative advertising, imperfect targeting and welfare," Economics Letters, Elsevier, vol. 55(1), pages 131-137, August.
  10. Simon P. Anderson & Régis Renault, 2009. "Comparative advertising: disclosing horizontal match information," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 558-581.
  11. Emons, Winand & Fluet, Claude, 2012. "Non-comparative versus comparative advertising of quality," International Journal of Industrial Organization, Elsevier, vol. 30(4), pages 352-360.
  12. V. Joseph Hotz & Mo Xiao, 2013. "Strategic Information Disclosure: The Case Of Multiattribute Products With Heterogeneous Consumers," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 865-881, January.
  13. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
  14. Sharon Horsky, 2006. "The Changing Architecture of Advertising Agencies," Marketing Science, INFORMS, vol. 25(4), pages 367-383, 07-08.
  15. Peters, Michael, 1984. "Restrictions on Price Advertising," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 472-485, June.
  16. F. Barigozzi & M. Peitz, 2004. "Comparative Advertising and Competition Policy," Working Papers 524, Dipartimento Scienze Economiche, Universita' di Bologna.
  17. repec:dau:papers:123456789/12478 is not listed on IDEAS
  18. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
  19. Levent Celik, 2014. "Information Unraveling Revisited: Disclosure of Horizontal Attributes," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 113-136, March.
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