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Preview Provision Under Competition

Author

Listed:
  • Yi Xiang

    (The Hong Kong University of Science and Technology, Clear Water Bay Kowloon, Hong Kong)

  • David A. Soberman

    (Rotman School of Management at the University of Toronto, Toronto, Ontario M5S 3E6, Canada)

Abstract

In certain categories, an important element of competition is the use of previews to signal information to potential consumers about product attributes. For example, the front page of a newspaper provides a preview to potential newspaper buyers before they purchase the product. In this context, a news provider can provide previews that are highly informative about the content of the news product. Conversely, a news provider can utilize a preview that is relatively uninformative. We examine the incentives that firms have to adopt different preview strategies in a context where they do not have complete control of product positioning. Our analysis shows that preview strategy can be a useful source of differentiation. However, when a firm adopts a strategy of providing informative previews, it confers a positive externality on a competitor that utilizes uninformative previews. This reinforces the incentive of the competitor to use uninformative previews and explains why the market landscape in news provision is often characterized by asymmetric competition.

Suggested Citation

  • Yi Xiang & David A. Soberman, 2011. "Preview Provision Under Competition," Marketing Science, INFORMS, vol. 30(1), pages 149-169, 01-02.
    • Handle: RePEc:inm:ormksc:v:30:y:2011:i:1:p:149-169
    DOI: 10.1287/mksc.1100.0606
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    References listed on IDEAS

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    Cited by:

    1. Daniel Halbheer & Florian Stahl & Oded Koenigsberg & Donald R. Lehmann, 2013. "Digital Content Strategies," Working Papers 329, University of Zurich, Department of Business Administration (IBW).
    2. Chutian Wang & Bo Zhou & Yogesh V. Joshi, 2024. "Endogenous Consumption and Metered Paywalls," Marketing Science, INFORMS, vol. 43(1), pages 158-177, January.
    3. Chrysanthos Dellarocas & Juliana Sutanto & Mihai Calin & Elia Palme, 2016. "Attention Allocation in Information-Rich Environments: The Case of News Aggregators," Management Science, INFORMS, vol. 62(9), pages 2543-2562, September.
    4. Emaad Manzoor & Nikhil Malik, 2023. "Designing Effective Music Excerpts," Papers 2309.14475, arXiv.org.
    5. Halbheer, Daniel & Stahl, Florian & Koenigsberg, Oded & Lehmann, Donald R., 2014. "Choosing a digital content strategy: How much should be free?," International Journal of Research in Marketing, Elsevier, vol. 31(2), pages 192-206.
    6. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.

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