Experimental evidence on advertising and price competition

Ninghua Du

New Zealand Economic Papers, 2009, vol. 43, issue 2, 191-202

Abstract: Theory (Du, 2008) predicts that equilibrium prices will be lower when firms' advertising conveys the price than when it does not convey the price. In the laboratory sessions, sellers make two decisions: what price to set, and whether to advertise to eliminate consumer search costs for their product. The two experimental conditions are (1) advertising the price, or (2) advertising before pricing. Data from ten sessions indicate that, as predicted, firms choose more often to advertise when advertising conveys price, and prices in the second treatment are significantly higher than prices in the first treatment.

Keywords: experiment; advertising; search cost; pricing (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00779950903005523 (text/html)
Access to full text is restricted to subscribers.

Related works:
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: https://EconPapers.repec.org/RePEc:taf:nzecpp:v:43:y:2009:i:2:p:191-202

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RNZP20

DOI: 10.1080/00779950903005523

Access Statistics for this article

New Zealand Economic Papers is currently edited by Dennis Wesselbaum

More articles in New Zealand Economic Papers from Taylor & Francis Journals
Bibliographic data for series maintained by ().