``We sold a million copies''-The role of advertising past sales

Paulo Klinger Monteiro and J. L. Moraga
Additional contact information
J. L. Moraga: Copenhagen University

Industrial Organization from EconWPA

Abstract: We model a two periods market with two-sided quality uncertainty. In the first period the seller gathers information about consumers' tastes upon observing his sales. In the second period the seller may or may not deliver the information. If the monopolist must commit either to reveal or conceal past-sales before observing them, commiting to reveal is the dominant strategy whenever advertising cost is low, buyers are many and their private information is accurate. When the seller can postpone the advertising decision and gains experience, past-sales revelation occurs partially. In equilibrium, delivery of sales-data occurs to induce some buyers' herding behaviour. We carry out the analysis for two different informational scenarios.

Keywords: two-sided quality uncertainty; past-sales advertising; herding behaviour (search for similar items in EconPapers)
JEL-codes: D82 L15 M37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 1998-12-08
Note: Type of Document - Postscript file; prepared on IBM PC - PC- TEX/Latex; to print on HP/PostScript/; pages: 20 ; figures: request from author/
View list of references

Downloads: (external link)
http://129.3.20.41/eps/io/papers/9812/9812001.pdf (application/pdf)
http://129.3.20.41/eps/io/papers/9812/9812001.ps.gz (application/postscript)

Related works:
Working Paper: "We sold a million copies" - The Role of Advertising Past Sales (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:9812001

Access Statistics for this paper

More papers in Industrial Organization from EconWPA
Series data maintained by EconWPA ().