This paper studies advertising in vertically differentiated product markets with positive consumption externalities. In … consumers. In such markets, we show that firms will engage in advertising competition in order to convince consumers of their … levels of advertising. …

The aim of this Paper is to demonstrate that advertising can have an important function in markets with consumption … externalities, apart from its persuasive and informative roles. We show that advertising may function as a device to coordinate … implications of advertising as a coordinating device are examined in the pricing and advertising decisions of firms interacting …

explanation for advertising in these product categories is therefore not compelling. In this paper we develop a model of firm … advertising based on the notion that consumer valuations of different products may depend on the number of individuals purchasing … each. We show that firms can use advertising to coordinate consumer purchases in such cases, even if advertising levels are …