Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, May 2, 2013

Comparative versus Informative Advertising in Oligopolistic Markets

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.

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