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Coupon Advertising Under Imperfect Price Information

José Luis Moraga‐González and Emmanuel Petrakis ()
Authors registered in the RePEc Author Service: Jose Luis Moraga-Gonzalez ()

Journal of Economics & Management Strategy, 1999, vol. 8, issue 4, 523-544

Abstract: This paper studies sales promotions through coupons in an oligopoly under imperfect price information. Sellers can distribute either ordinary coupons, or coupon (price) advertising, or both types of coupons, at distant locations to attract consumers from their rivals' markets. A unique symmetric pure‐strategy equilibrium exists where rebates and couponing intensity are always positive. In the ordinary‐coupon equilibrium, prices, promotional efforts, and sellers' profits are higher than in the coupon‐advertising equilibrium. However, if sellers are allowed to distribute both types of coupons, only coupon advertising is sent out in equilibrium.

Date: 1999
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Handle: RePEc:bla:jemstr:v:8:y:1999:i:4:p:523-544