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Repetitive Advertising to Deter Entry
Author(s) -
Ishigaki Hiroaki
Publication year - 2001
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/1467-999x.00130
Subject(s) - advertising , subgame perfect equilibrium , repetition (rhetorical device) , deterrence theory , deterrence (psychology) , business , microeconomics , economics , game theory , law and economics , political science , law , linguistics , philosophy
This paper develops a model in which advertising not only informs consumers of brands, but also can influence consumer brand choices through its repetition. By examining a multi‐stage game in which two firms sequentially advertise before simultaneously setting a price, we show that repetitive advertising can be a legitimate entry‐deterrence weapon available to an incumbent in subgame perfect equilibrium. This demonstrates that firms’ conduct of advertising repetition has anticompetitive implications.