Advertising and Collusion in Retail Markets

• Main Authors: BAGWELL, Kyle, LEE, Gea Myoung
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2008
• Subjects: advertising; collusion; private information; retail markets; Advertising and Promotion Management; Behavioral Economics; Industrial Organization
• Online Access: https://ink.library.smu.edu.sg/soe_research/1112; https://ink.library.smu.edu.sg/context/soe_research/article/2111/viewcontent/Advertising__Collusion.pdf
• Institution: Singapore Management University

We consider non-price advertising by retail firms that are privately informed as to their respective production costs. We first analyze a static model. We construct an advertising equilibrium, in which informed consumers use an advertising search rule whereby they buy from the highest-advertising fi...