Please use this identifier to cite or link to this item:
Mantovani, Andrea
Amir, Rabah
Year of Publication: 
Series/Report no.: 
Quaderni - Working Paper DSE No. 470
Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE), Bologna
Consider a marketing division of a monopoly firm that faces two marketing options: Market enlargement and elasticity improvement. These options are conceived in terms of the target of the firm's advertising campaigns: Potential new consumers versus existing consumers. Using a CES demand function in a simple model, we demonstrate that the two activities are complementary, so that for some cost configurations, the firm will find it profitable to implement the two options together when either option alone would result in a loss. This calls for the marketing division to be integrated, rather than decentralized.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

Files in This Item:
165.23 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.