Non-Comparative Versus Comparative Advertising of Quality

International Journal of Industrial Organization, Forthcoming

CIRPEE Working Paper No. 11-39

30 Pages Posted: 14 Dec 2011 Last revised: 23 Jan 2012

See all articles by Winand Emons

Winand Emons

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR)

Claude Fluet

Université Laval

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2011

Abstract

Two firms produce a good with a horizontal and a vertical characteristic called quality. The difference in the unobservable quality levels determines how the firms share the market. We consider two scenarios: in the first one, firms disclose quality; in the second one, they send costly signals thereof. Under non-comparative advertising a firm advertises its own quality, under comparative advertising a firm advertises the quality differential. In either scenario, under comparative advertising the firms never advertise together which they may do under non-comparative advertising. Moreover, under comparative advertising firms do not advertise when the informational value to consumers is small.

Keywords: Quality, advertising, disclosure, signalling

JEL Classification: D82, L15, M37

Suggested Citation

Emons, Winand and Fluet, Claude-Denys, Non-Comparative Versus Comparative Advertising of Quality (December 1, 2011). International Journal of Industrial Organization, Forthcoming, CIRPEE Working Paper No. 11-39, Available at SSRN: https://ssrn.com/abstract=1971698 or http://dx.doi.org/10.2139/ssrn.1971698

Winand Emons

University of Bern - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Claude-Denys Fluet (Contact Author)

Université Laval ( email )

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