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Author Barigozzi, Francesca ♦ Garella, Paolo G. ♦ Peitz, Martin
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Subject Keyword Renown Brand ♦ Preliminary Draft ♦ Rival Sell-ing ♦ One-firm Model ♦ Oligopoly Phenomenon ♦ Dif-ferent Result ♦ Multiple Signal Sender ♦ Pow-erful Signal ♦ Gener-alize Conclusion ♦ Context Advertising ♦ Absent Rivalry ♦ Branded Good ♦ Price Signal
Abstract Preliminary draft We analyze the problem faced by a firm that has to signal qual-ity of its product in a market where it competes against a rival sell-ing a branded good. Firms know qualities perfectly, while consumers only know the quality of the branded good. While the literature has stressed the role of prices as signals, absent rivalry and multiple signal senders, we show that in our context advertising can be a more pow-erful signal than price, while price signals may fail. The model we use is just one step away from monopoly and yet it obtains drastically dif-ferent results. Since advertising is typically an oligopoly phenomenon, this suggests that prudence should be exerted in attempting to gener-alize conclusions derived from one-firm models about the role of prices and advertising as signals.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Publisher Date 2005-01-01