The advertising mix for a search good

Simon Anderson and Régis Renault

No 8756, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Advertising; Content analysis; Information; Persuasion game; Search (search for similar items in EconPapers)
JEL-codes: D42 L15 M37 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mkt
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Related works:
Journal Article: The Advertising Mix for a Search Good (2013)
Working Paper: The advertising mix for a search good (2012)
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