Competitive pricing and advertising with spillover

Research output: Contribution to journalArticlepeer-review

Abstract

We study firms’ advertising strategies when they face attention-limited consumers, who pay more attention to a horizontal attribute when it is more heavily advertised. Under competition, one firm’s advertising can affect a consumer’s valuation for competing products, which we term as the spillover effect. We show that competing firms may only advertise the horizontal attribute when the spillover is weak. Moreover, competing firms may advertise less than a monopolist.
Original languageEnglish
Article number102660
JournalJournal of Mathematical Economics
Early online date28 Feb 2022
DOIs
Publication statusE-pub ahead of print - 28 Feb 2022

Bibliographical note

© 2022 The Authors. CC BY NC ND 4.0

Keywords

  • Advertising
  • Horizontal attribute
  • Limited attention
  • Spillover

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