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With a little help from my enemy: comparative advertising as a signal of quality

Author

Listed:
  • Francesca BARIGOZZI
  • Paolo Giorgio GARELLA
  • Martin PEITZ

Abstract

We extend the theory of advertising as a quality signal, using a model where an entrant can choose to advertise by comparing its product to that of an established incumbent. Comparative advertising, comparing quality of one?s own product to that of a rival?s, empowers the latter to file for court intervention if it believes the comparison to be false or misleading. We show that comparative advertising can be a signal in instances where generic advertising is not viable.

Suggested Citation

  • Francesca BARIGOZZI & Paolo Giorgio GARELLA & Martin PEITZ, 2008. "With a little help from my enemy: comparative advertising as a signal of quality," Departmental Working Papers 2008-031, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2008-031
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    More about this item

    Keywords

    Advertising; Quality; signaling; Entry; Competition;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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