Bagwell, Kyle; Overgaard, Per Baltzer - Centre for Industrial Economics (CIE), Økonomisk Institut - 2005
This paper studies the role of advertising and prices as signals of quality in a purely static setting, where repeat … assumptions, that the high-quality firm will distort its price upwards and its level of advertising downwards compared to the … complete-information case. We then show, under relatively mild additional conditions, that the high-quality firm will choose a …