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Comparative Advertising
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Topic: Advertising
Sort Desciption: for a favorable attitude towards comparative advertising on the part of competition au- ... due to comparative advertising about product attributes? ...
Content Inside: Comparative Advertising Simon P. Anderson and Rgis Renault This version October 2006. PRELIMINARY: COMMENTS WELCOME Abstract Consumer information on products affects competition and profits. We analyze firms decisions to impart product information through advertising: comparative ad- vertising also allows them to impart information about rivals products. If firms sell products of similar qualities both want to advertise detailed product information that enables consumers to determine their matches: there is no role for comparative ad- vertising. If qualities are sufficiently dissimilar the high-quality one will not want to disclose match information. If legal the low-quality firm rival would like to adver- tise match information about its rival. Such comparative advertising may have a detrimental impact on welfare by leading more consumers to consume the low quality product: this effect can dominate the benefits from improved consumer information and reduce social welfare if qualities are different enough. Keywords: comparative advertising information product differentiation quality. JEL Classification: D42 L15 M37 Acknowledgement 1 We gratefully acknowledge travel funding from the CNRS and NSF under grants INT-9815703 and GA10273 and research funding under grant SES- 0137001. We thank yk nal and Joshua Gans for comments along with various seminar participants (Toulouse I ECARES-ULB CORE-UCL Boston University Roy seminar in Paris St. Andrews University Pompeu-Fabreu Melbourne Business School University of Southern California Claremont-McKenna Virginia) and confer- ence attendees (CESIfo 5th Area conference on Applied Micro in Munich and EARIE in Oporto). We thank IDEI (University of Toulouse I) and the University of Montpellier and Melbourne Business School for their hospitality. Department of Economics University of Virginia PO Box 400182 Charlottesville VA 22904-4128 USA. sa9w@virginia.edu ThEMA Universit de Cergy-Pontoise 33 Bd. du Port 9501 ...
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