Comparative Advertising: disclosing horizontal match information

Simon Anderson () and Régis Renault ()

No 2008-29, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Improved consumer information about (symmetric) products can lead to better matching but also higher prices, so consumer surplus can go up or down, while profits rise. With enough firm asymmetry though, the stronger firm's price falls with more information, so both effects benefit consumers. This is when comparative advertising is used, against a large firm by a small one. Comparative advertising, as it imparts more information, therefore helps consumers. While it also improves profitability of the small firm, overall welfare goes down because of the large loss to the attacked firm.

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-mic and nep-mkt
Date: 2008

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Journal Article: Comparative advertising: disclosing horizontal match information (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:ema:worpap:2008-29

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