Persuading Consumers With Social Attitudes

Stefan Bühler () and Daniel Halbheer
Authors registered in the RePEc Author Service: Stefan Buehler

No 1117, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: This paper analyzes persuasive advertising and pricing in oligopoly if firms sell differentiated products and consumers have heterogenous 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)
Pages: 24 pages
Date: 2011-04
New Economics Papers: this item is included in nep-com and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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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:usg:econwp:2011:17

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