Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86751
Authors: 
Vikander, Nick
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper 11-016/1
Abstract: 
This paper shows how a firm can use non-targeted advertising to exploit consumers' desire for social status. A monopolist sells multiple varieties of a good to consumers who each care about what others believe about his wealth. Advertising allows consumers both to buy different varieties and to recognize them when others buy. In equilibrium, the firm advertises each variety to those who will buy but also to all poorer consumers who will not, so that they understand what having the goods signals. If concern for status is sufficiently high, then the firm will only place a single variety on the market.
Subjects: 
advertising
targeting
social status
JEL: 
M37
L12
L15
Document Type: 
Working Paper

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