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Informative Advertising and Competition: A Noncooperative Approach

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  • Gary-Bobo, Robert J
  • Michel, Philippe

Abstract

The properties of informative advertising are studied in the context of an imperfectly competitive general equilibrium model of the Cournot-Walras type. Competitive conditions are recreated using the "replication technique." It is shown that individually optimal advertising expenditures are zero if the number of agents is large enough in the economy. In other words, even in approximately competitive economies, the informative advertising phenomenon cannot be observed. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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  • Gary-Bobo, Robert J & Michel, Philippe, 1991. "Informative Advertising and Competition: A Noncooperative Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(2), pages 321-339, May.
    • Handle: RePEc:ier:iecrev:v:32:y:1991:i:2:p:321-39
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    Cited by:

    1. Fabio FIORILLO & Marco LILLA & Stefano STAFFOLANI, 2013. "Advertising Has Got You On The Run. Well-Being, Consumption and Leisure in a GE model," Working Papers 389, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    2. Nelson Sá, 2015. "Market concentration and persuasive advertising: a theoretical approach," Journal of Economics, Springer, vol. 114(2), pages 127-151, March.
    3. Hamilton, Stephen F., 2009. "Informative advertising in differentiated oligopoly markets," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 60-69, January.
    4. Hamilton, Stephen F., 2004. "Informative Advertising in Concentrated, Differentiated Markets," Working Papers 201546, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.

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