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Informative advertising with spillover effects
Author(s) -
Nakata Hiroyuki
Publication year - 2011
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2011.00170.x
Subject(s) - spillover effect , grossman , monopolistic competition , economics , duopoly , advertising , microeconomics , bertrand competition , oligopoly , keynesian economics , business , cournot competition , monopoly
This paper studies the effects of advertising in a Bertrand duopoly model, which extends Grossman and Shapiro (1984) by introducing the spillover advertising effect on top of the direct advertising effect. It is shown that the spillover effects would make the environment more monopolistic: higher prices and lower demand.