The paper formalizes the intuition that brands are consumed for image reasons and that advertising creates a brand …'s image. The key idea is that advertising informs the public of brand names and creates the possibility of conspicuous … consumption by rendering brands a signalling device. In a price competition framework, we show that advertising increases …

This paper analyzes persuasive advertising and pricing in oligopoly if firms sell differentiated products and consumers … that the demand-enhancing effect of persuasive advertising varies across consumers and increases in the average degree of … conformity. In equilibrium, both quality and cost leaders choose higher advertising intensities and charge higher prices than …