Advertising as signal jamming

Andreas Grunewald and Matthias Kräkel

International Journal of Industrial Organization, 2017, vol. 55, issue C, 91-113

Abstract: This paper considers a model of informative advertising that allows firms to jam the consumers’ signals on product quality before choosing prices at a second stage. We find that the price competition at the second stage may overrule the basic insights from the signal-jamming approach in other areas of application. As a consequence, a firm may advertise more intensely the higher is the difference of the expected product qualities. Moreover, a firm’s optimal advertising intensity can decrease with quality uncertainty.

Keywords: Signal jamming; Informative advertising; Price competition (search for similar items in EconPapers)
JEL-codes: D11 L1 M37 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:55:y:2017:i:c:p:91-113

DOI: 10.1016/j.ijindorg.2017.09.003

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