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Non-comparative versus Comparative Advertising as a Quality Signal

Winand Emons () and Claude Fluet ()

Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis from Verein für Socialpolitik / German Economic Association

Abstract: Two firms produce a product with a horizontal and a vertical characteristic that we call quality. The difference in the quality levels determines how the firms share the market. Consumers do not observe quality before purchase. Under non-comparative advertising a firm signals its own quality, under comparative advertising a firm signals the quality differential. In both scenarios firms may boast at a cost. In equilibrium firms actually do so, but consumers rationally infer the true quality if firms advertise. Under comparative advertising the firms never advertise together which they may do under non-comparative advertising.

Keywords: advertising; costly state falsification; signalling (search for similar items in EconPapers)
JEL-codes: D82 L15 M37 (search for similar items in EconPapers)
Date: 2011
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Related works:
Working Paper: Non-comparative versus Comparative Advertising as a Quality Signal (2009) Downloads
Working Paper: Non-comparative versus Comparative Advertising as a Quality Signal (2009) Downloads
Working Paper: Non-comparative versus Comparative Advertising as a Quality Signal (2008) Downloads
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