Entry Deterrence, Product Quality: Price and Advertising as Signals.

This paper analyses the situation of an incumbent monopoly who has both to signal that her costs are low in order to dissuade entry tomorrow, and that her product has a high quality in order to attract consumers in the current period. The incumbent can use both price and advertising as signals. I show that potential entry is socially beneficial and that the separating equilibrium may involve a positive amount of "dissipative" advertising.

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Year of publication:	1996
Authors:	Linnemer, L.
Subject:	ADVERTISING \| PRICES \| INFORMATION \| GAMES \| MONOPOLIES

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Type of publication:	Book / Working Paper
Notes:	32 pages
Classification:	C72 - Noncooperative Games ; D42 - Monopoly ; D82 - Asymmetric and Private Information ; L15 - Information and Product Quality; Standardization and Compatibility ; M37 - Advertising
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005671522