Persuading Consumers with Social Attitudes

Stefan Buehler and Daniel Halbheer

No 3470, CESifo Working Paper Series from CESifo

Abstract: This paper analyzes persuasive advertising and pricing in oligopoly if firms sell differentiated products and consumers have heterogeneous social attitudes towards the consumption by others. Deriving product demand from primitives, we show that the demand-enhancing effect of persuasive advertising varies across consumers and increases in the average degree of conformity. In equilibrium, both quality and cost leaders choose higher advertising intensities and charge higher prices than their competitors. In addition, we show that an increase in the average degree of conformity among consumers reinforces asymmetries between firms.

Keywords: advertising; social attitude; consumption externality; quality (search for similar items in EconPapers)
JEL-codes: D11 D43 L15 L21 M37 (search for similar items in EconPapers)
Date: 2011
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Related works:
Journal Article: Persuading consumers with social attitudes (2012)
Working Paper: Persuading Consumers With Social Attitudes (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3470

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