Competitive pricing and advertising with spillover

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.

Publication DOI: https://doi.org/10.1016/j.jmateco.2022.102660
Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
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College of Business and Social Sciences > Aston Business School
Additional Information: © 2022 The Authors. CC BY NC ND 4.0
Uncontrolled Keywords: Advertising,Horizontal attribute,Limited attention,Spillover,Economics and Econometrics,Applied Mathematics
Publication ISSN: 0304-4068
Full Text Link:
Related URLs: https://www.sci ... 304406822000180 (Publisher URL)
PURE Output Type: Article
Published Date: 2022-08
Published Online Date: 2022-02-28
Accepted Date: 2022-02-19
Authors: Liu, Xingyi (ORCID Profile 0000-0003-3816-4126)

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