Informative Advertising and Consumer Search in a Differentiated-Products Duopoly

@inproceedings{Atasoy2007InformativeAA,
  title={Informative Advertising and Consumer Search in a Differentiated-Products Duopoly},
  author={Mehmet Mahir Atasoy},
  year={2007}
}
This paper analyzes informative advertising in a duopoly market with differentiated products when consumer search is costless. If consumers are fully rational, exposure to a single advertisement is sufficient for them to obtain complete market information. In this case, firms undersupply advertising compared to the social optimum because of free-riding. If consumers are not fully rational, they may ignore the existence of another firm when the only advertisement they receive quotes the monopoly… CONTINUE READING

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