COORDINATION IN MARKETS WITH CONSUMPTION EXTERNALITIES: ADVERTISING AND PRODUCT QUALITY
In this paper we study advertising in markets with positive consumption externalities. In such markets, we show that firms may engage in advertising competition to coordinate consumer expectations on their own brand as long as they produce goods of similar quality. The firm with the lower-quality product has a greater incentive to advertise. Hence in equilibrium, the lower‐quality product will often be more popular.
Year of publication: |
2011
|
---|---|
Authors: | PASTINE, IVAN ; PASTINE, TUVANA |
Published in: |
Manchester School. - School of Economics, ISSN 1463-6786. - Vol. 79.2011, 1, p. 45-62
|
Publisher: |
School of Economics |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Student incentives and diversity in college admissions
Pastine, Ivan, (2009)
-
Political campaign spending limits
Pastine, Ivan, (2010)
-
Caps on political contributions, monetary penalties and politician preferences
Pastine, Ivan, (2009)
- More ...