Thursday, May 2, 2013
Posted by D. Daniel Sokol
Maria Alipranti, University of Crete, Evangelos Mitrokostas, University of Portsmouth and Emmanuel Petrakis, University of Crete discuss Comparative versus Informative Advertising in Oligopolistic Markets.
ABSTRACT: The present paper examines endogenously the fi rms incentives to invest in informative and comparative advertising, in an oligopolistic market with horizontally differentiated products where competition take place in quantities. We show that, in equilibrium the fi rms undetake a mix advertising strategy that combines both informative and compara tive advertising investments. We further compare our results over the equilibrium market outcomes and the social welfare obtained under the endogenous advertising confi guration with the benchmark case, without firms advertising activities, and the cases of mere in formative and mere comparative advertising. We demonstrate that the equilibrium market outcomes, as well as, the welfare alter signi ficantly depending on the type(s) of advertising that fi rms have available in the market and the degree of the market competition.