Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 285-296 |
| Journal | Managerial and Decision Economics |
| Volume | 39 |
| Issue number | 3 |
| Early online date | 14 Nov 2017 |
| DOIs | |
| Publication status | Published - 1 Mar 2018 |
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Optimal targeting with entry. / Liu, Xingyi.
In: Managerial and Decision Economics, Vol. 39, No. 3, 01.03.2018, p. 285-296.Research output: Contribution to journal › Article
TY - JOUR
T1 - Optimal targeting with entry
AU - Liu, Xingyi
PY - 2018/3/1
Y1 - 2018/3/1
N2 - We study an advertising agency's optimal choice of targeting technology with endogenous market structure, namely, when targeting changes firms' entry strategies into the advertising and product market. We show that the advertising agency faces a trade‐off between demand‐expansion and profit‐dissipation: The former arises as targeting induces more entry and increases the demand for advertising; the latter refers to that targeting relaxes competition by inducing more differentiation. We show that perfect targeting is not optimal for the advertising agency. Compared to social optimum, the advertising agency underinvests in targeting when investment cost is low and overinvests when targeting is costly.
AB - We study an advertising agency's optimal choice of targeting technology with endogenous market structure, namely, when targeting changes firms' entry strategies into the advertising and product market. We show that the advertising agency faces a trade‐off between demand‐expansion and profit‐dissipation: The former arises as targeting induces more entry and increases the demand for advertising; the latter refers to that targeting relaxes competition by inducing more differentiation. We show that perfect targeting is not optimal for the advertising agency. Compared to social optimum, the advertising agency underinvests in targeting when investment cost is low and overinvests when targeting is costly.
UR - https://onlinelibrary.wiley.com/doi/full/10.1002/mde.2903
U2 - 10.1002/mde.2903
DO - 10.1002/mde.2903
M3 - Article
VL - 39
SP - 285
EP - 296
JO - Managerial and Decision Economics
JF - Managerial and Decision Economics
SN - 0143-6570
IS - 3
ER -