Informative Advertising in a Mixed Oligopoly

Informative Advertising in a Mixed Oligopoly We study a mixed duopoly in which firms compete in advertising and quantity. The sum of informative advertising undertaken often exceeds that in a private duopoly, and whenever this happens the presence of the public (i.e., government) firm decreases social welfare. Surprisingly, the public firm may increase its advertising as the cost of advertising increases. Moreover, the basic insight that the public firm can increase advertising and reduce welfare remains when there are advertising spillovers, in a case with a foreign rival, and in an illustration of Bertrand competition. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Informative Advertising in a Mixed Oligopoly

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Publisher
Springer US
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-016-9541-0
Publisher site
See Article on Publisher Site

Abstract

We study a mixed duopoly in which firms compete in advertising and quantity. The sum of informative advertising undertaken often exceeds that in a private duopoly, and whenever this happens the presence of the public (i.e., government) firm decreases social welfare. Surprisingly, the public firm may increase its advertising as the cost of advertising increases. Moreover, the basic insight that the public firm can increase advertising and reduce welfare remains when there are advertising spillovers, in a case with a foreign rival, and in an illustration of Bertrand competition.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Aug 26, 2016

References

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