Random Advertising and Monopolistic Price Dispersion.
We investigate the role of price advertising in a market where consumers are imperfectly informed about prices. We consider a monopolist whose demand depends on price and advertising expenditure. This demand function is derived from optimizing behavior of consumers. Uninformed consumers may pay a cost to visit the seller and obtain price information. Advertising enables the monopolist to increase the number of informed consumers. In equilibrium the uninformed consumers form rational price expectations, and the seller necessarily adopts a random pricing and advertising strategy. Copyright 1994 by MIT Press.
Year of publication: |
1994
|
---|---|
Authors: | Bester, Helmut |
Published in: |
Journal of Economics & Management Strategy. - Wiley Blackwell. - Vol. 3.1994, 3, p. 545-59
|
Publisher: |
Wiley Blackwell |
Saved in:
Saved in favorites
Similar items by person
-
Externalities, communication and the allocation of decision rights
Bester, Helmut, (2005)
-
Bester, Helmut, (2006)
-
Exit options in incomplete contracts with asymmetric information
Bester, Helmut, (2008)
- More ...