Strategic Informative Advertising in a Horizontally Differentiated Duopoly

Levent Celik

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: When firms possess information about their competitors’ products, their advertisements may leak extra information. I analyze this within a duopoly television market that lasts for two periods. Each station may advertise its upcoming program by airing a tune-in during the first program. Viewers may alternatively sample a program. I find that each station’s equilibrium tune-in decision depends on both upcoming programs - thereby revealing more information than the actual content - when the sampling cost is sufficiently low. Otherwise, tune-in decisions are made independently. It is welfare improving to ban tune-ins in the latter case but not in the former.

Keywords: Informative advertising; Tune-ins; Sampling; Information disclosure; Signaling. (search for similar items in EconPapers)
JEL-codes: D83 L13 M37 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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