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.
|Journal||Journal of Mathematical Economics|
|Early online date||28 Feb 2022|
|Publication status||E-pub ahead of print - 28 Feb 2022|
Bibliographical note© 2022 The Authors. CC BY NC ND 4.0
- Horizontal attribute
- Limited attention