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A Generalized Model of Advertised Sales

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  • Sandro Shelegia
  • Chris M. Wilson

Abstract

To better understand temporary price reductions or "sales," this paper presents a generalized "clearinghouse" framework of advertised sales and explores some applications. By viewing the firms as competing in utility and amending the conventional tiebreak rule, we allow for multiple dimensions of firm heterogeneity in complex market environments. Moreover, we (i) provide original insights into the number and types of firms that use sales, (ii) offer new results on how firm heterogeneity affects market outcomes, (iii) extend a common empirical "cleaning" procedure, and (iv) analyze a family of activities in sales markets, including persuasive advertising and obfuscation.

Suggested Citation

  • Sandro Shelegia & Chris M. Wilson, 2021. "A Generalized Model of Advertised Sales," American Economic Journal: Microeconomics, American Economic Association, vol. 13(1), pages 195-223, February.
    • Handle: RePEc:aea:aejmic:v:13:y:2021:i:1:p:195-223
    DOI: 10.1257/mic.20170152
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    Cited by:

    1. David Ronayne & Greg Taylor, 2022. "Competing Sales Channels with Captive Consumers," The Economic Journal, Royal Economic Society, vol. 132(642), pages 741-766.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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