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Second-best optimality of advertising when monopoly is sanctioned

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  • Just, Richard E.
  • Pope, Rulon D.

Abstract

Monopoly pricing is sanctioned by government in a variety of cases (e.g., patent policy). We derive necessary and sufficient conditions on preferences determining when monopolists choose socially optimal, excessive, or inadequate advertising conditional on monopoly pricing behavior. We then derive the behavioral implications of these conditions in an empirically tractable framework that is estimable with typical observable data.

Suggested Citation

  • Just, Richard E. & Pope, Rulon D., 2012. "Second-best optimality of advertising when monopoly is sanctioned," Journal of Economics and Business, Elsevier, vol. 64(6), pages 393-398.
    • Handle: RePEc:eee:jebusi:v:64:y:2012:i:6:p:393-398
    DOI: 10.1016/j.jeconbus.2012.08.001
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    References listed on IDEAS

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