Caught in a stranglehold? Advertising: What else?

Laurent Linnemer

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Abstract: I analyze a quality signaling problem by a monopoly introducing a new experience good. A high-quality type aims to signal itself to consumers but can be imitated by a low-quality type with either a low or a high cost. In the unique separating equilibrium after deletion of dominated strategies, the high-quality type separates through a marketing mix of price and dissipative advertising. Advertising is used despite the absence of repeat purchases or informed consumers.

Keywords: Advertising; Quality; Signaling (search for similar items in EconPapers)
Date: 2011-01
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Citations: View citations in EconPapers (1)

Published in Manchester School, 2011, 79 (1), pp.63-80. ⟨10.1111/j.1467-9957.2010.02182.x⟩

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Journal Article: CAUGHT IN A STRANGLEHOLD? ADVERTISING: WHAT ELSE? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00558160

DOI: 10.1111/j.1467-9957.2010.02182.x

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