comparative Advertising

Simon Anderson () and Régis Renault ()

No 2006-18, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Consumer information on products affects competition and profits. We analyze firms' decisions to impart product information through advertising: comparative advertising also allows them to impart information about rivals' products. If firms sell products of similar qualities, both want to advertise detailed product information that enables consumers to determine their matches: there is no role for comparative advertising. If qualities are sufficiently dissimilar, the high-quality one will not want to disclose match information. If legal, the low-quality firm rival would like to advertise match information about its rival. Such "comparative" advertising may have a detrimental impact on welfare by leading more consumers to consume the low quality product: this effect can dominate the benefits from improved consumer information and reduce social welfare if qualities are different enough.

Keywords: comparative advertising; information; product differentiation; quality (search for similar items in EconPapers)
JEL-codes: D42 L15 M37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ipr, nep-mic and nep-mkt
Date: 2006
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Persistent link: http://EconPapers.repec.org/RePEc:ema:worpap:2006-18

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