Chioveanu, I.; (2009) Advertising, brand loyalty and pricing. (ELSE Working Papers 323). ESRC Centre for Economic Learning and Social Evolution: London, UK.

Preview

PDF 15002.pdf Download (247kB)

Abstract

I consider an oligopoly model where, prior to price competition, firms invest in persuasive advertising and induce brand loyalty in consumers who would otherwise buy the cheapest alternative on the market. This setting, in which persuasive advertising is introduced to homogenous product markets, provides an alternative explanation for price dispersion phenomena. Despite ex-ante symmetry, the equilibrium profile of advertising outlays is asymmetric. It follows that endogenously determined brand loyal consumer bases are not symmetric across firms. This raises a robustness question regarding Varian’s "model of sales" where symmetry is exogenously assumed.

Download activity - last month

Export as XMLCSVJSON

Download activity - last 12 months

Export as XMLJSONCSV

Downloads by country - last 12 months

Export as XMLJSONCSV

Archive Staff Only

View Item