Product Quality, Advertising Intensity and Market Size

Bing Han () and Hayley Chouinard ()

No 2013-12, Working Papers from School of Economic Sciences, Washington State University

Abstract: We develop a model of product differentiation in which firms strategically compete in product quality and advertising intensity. Consumers face a trade-off between higher quality goods and price. Increased competition may lead to higher or lower quality products. Consumers always benefit from more competition as a reduction in price offsets reduced quality.

Keywords: advertising intensity; consumer surplus; market size; product quality (search for similar items in EconPapers)
JEL-codes: L11 L15 L22 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2013-09
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Journal Article: Product quality, advertising intensity and market size (2014)
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