The Advertising Mix for a Search Good

Simon Anderson and Régis Renault ()
Additional contact information
Régis Renault: THEMA, Université de Cergy-Pontoise, 95011 Cergy Cedex, France

Management Science, 2013, vol. 59, issue 1, 69-83

Abstract: We extend the persuasion game to bring it squarely into the economics of advertising. We model advertising as exciting consumer interest into learning more about the product, and determine a firm's equilibrium choice of advertising content over quality information, price information, and horizontal match information. Equilibrium is unique whenever advertising is necessary. The outcome is a separating equilibrium with quality unravelling. Lower-quality firms need to provide more information. For a given quality level, as a function of consumer visit costs, first quality information is disclosed, then price information and then horizontal product information are added to the advertising mix. Some suggestive evidence is provided from airline ads in newspapers. This paper was accepted by J. Miguel Villas-Boas, marketing.

Keywords: persuasion game; advertising; search; content analysis; information (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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http://dx.doi.org/10.1287/mnsc.1120.1575 (application/pdf)

Related works:
Working Paper: The advertising mix for a search good (2012)
Working Paper: The advertising mix for a search good (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:59:y:2013:i:1:p:69-83

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