We study firms’ advertising strategies in an oligopolistic market in which both non-comparative and comparative advertising are present. We show that in equilibrium firms mix over the two types of advertising, with the intensity of comparative advertising exceeding that of non-comparative advertising; moreover, that the intensity of comparative increases relatively to non-comparative advertising as market competition intensifies. Interestingly, the use of comparative advertising may lead to higher consumers’ surplus and welfare in a mixed advertising market than in the absence of advertising or when either comparative or non-comparative advertising is not present.
|Journal||The Manchester School|
|Early online date||24 Jan 2017|
|Publication status||Early online - 24 Jan 2017|
- Comparative Advertising
- Non-comparative advertising
- Product Differentiation