Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46448
Authors: 
Buehler, Stefan
Halbheer, Daniel
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Industrial Organisation 3470
Abstract: 
This paper analyzes persuasive advertising and pricing in oligopoly if firms sell differentiated products and consumers have heterogeneous social attitudes towards the consumption by others. Deriving product demand from primitives, we show that the demand-enhancing effect of persuasive advertising varies across consumers and increases in the average degree of conformity. In equilibrium, both quality and cost leaders choose higher advertising intensities and charge higher prices than their competitors. In addition, we show that an increase in the average degree of conformity among consumers reinforces asymmetries between firms.
Subjects: 
advertising
social attitude
consumption externality
quality
JEL: 
D11
D43
L15
L21
M37
Document Type: 
Working Paper

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