Advertising Intensity and Welfare in an Equilibrium Search Model
Ian M. McCarthy
Emory University - Department of Economics
January 25, 2008
CAEPR Working Paper No. 2008-003
We analyze an equilibrium search model in a duopoly setting with bilateral heterogeneities in production and search costs in which firms can advertise by announcing price and location. We study existence, stability, and comparative statics in such a setting, compare the market advertising level to the socially optimal level, and find conditions in which firms advertise more or less than the social optimum.
Number of Pages in PDF File: 31
Keywords: Search, Advertising, Welfare
JEL Classification: D21, D43, D83, M37
Date posted: January 31, 2008
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