This paper analyzes how the use of endogenous direct advertising affects the functioning of a horizontally-differentiated market. We formulate a two-stage game of pricing and informative advertising in which two firms, first, compete with mass advertising and, later, build a database using their...

This paper presents an incomplete information game of pricing and targeted advertising with vertically differentiated product. Firms have incomplete information about production costs and can inform consumers about price and product characteristics by either using the mass media, which reaches...