Advertising Competition in Retail Markets

• Main Authors: BAGWELL, Kyle, LEE, Gea M.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2010
• Subjects: advertising; regulation; private information; retail markets; Advertising and Promotion Management; Industrial Organization
• Online Access: https://ink.library.smu.edu.sg/soe_research/1167; https://ink.library.smu.edu.sg/context/soe_research/article/2166/viewcontent/AdvertisingCompetitionRetail_2010_wp.pdf
• Institution: Singapore Management University

We consider non-price advertising by retail firms that are privately informed as to their respective production costs. We construct an advertising equilibrium, in which informed consumers use an advertising search rule whereby they buy from the highest-advertising firm. Consumers are rational in usi...