Advertising and Coordination
Kyle Bagwell,Garey Ramey +1 more
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TLDR
In this article, the authors provide a theoretical explanation for Benham's empirical association of the ability to advertise with lower prices and larger scale, and show that advertising becomes necessary for optimal coordination when the identity of the efficient firm is uncertain.Abstract:
When market information such as price is difficult to communicate, consumers and firms may be unable to take advantage of mutually beneficial scale economies, so that coordination failures arise. Ostensibly uninformative advertising expenditures can be used to eliminate coordination failures, by allowing an efficient firm to communicate implicitly that it offers a low price. This provides a theoretical explanation for Benham's (1972) empirical association of the ability to advertise with lower prices and larger scale. Advertising becomes necessary for optimal coordination when the identity of the efficient firm is uncertain. An application to loss-leader pricing is developed.read more
Citations
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Uninformative Advertising as an Invitation to Search
Dina Mayzlin,Jiwoong Shin +1 more
TL;DR: It is shown that message content, coupled with consumer search, can also serve as a credible signal of quality and endogenizing the firm's decision on the amount of advertising spending is robust.
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Advertising dynamics and competitive advantage
TL;DR: In this article, a dynamic model of advertising competition where firms repeatedly advertise, compete in the product market, and make entry as well as exit decisions is proposed, and two different models of advertising are studied: goodwill advertising and awareness advertising.
Journal ArticleDOI
The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart
Jeffrey Milyo,Joel Waldfogel +1 more
TL;DR: This article found that advertising stores substantially cut only prices of the products that they advertise, while non-advertising stores do not change prices of other products, at both advertising and nonadvertising stores, and no reductions in price dispersion across stores.
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The search for success: do the unemployed find stable employment?
René Böheim,Mark P. Taylor +1 more
TL;DR: This paper used discrete time proportional hazards regressions to model the impact of previous unemployment incidence and duration on job tenure and found that jobs that follow an unemployment spell have shorter mean duration than other jobs.
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Can Companies Influence Investor Behavior through Advertising? Super Bowl Commercials and Stock Returns
TL;DR: In this article, the authors examine whether companies can create mood and attention effects through advertising and find significant abnormal net buying activity for small trades in shares of recognized Super Bowl advertisers indicating that small investors tend to be the ones most attracted by the increased publicity.
References
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Journal ArticleDOI
Information and Consumer Behavior
TL;DR: In this article, the authors argue that consumers lack full information about the prices of goods, but their information is probably poorer about the quality variation of products simply because the latter information is more difficult to obtain.
Journal ArticleDOI
The Role of Market Forces in Assuring Contractual Performance
Benjamin Klein,Keith B. Leffler +1 more
TL;DR: The conditions under which transactors can use the market (repeat-purchase) mechanism of contract enforcement are examined in this article, where increased price is shown to be a means of assuring contractual performance.
Journal ArticleDOI
Signaling Games and Stable Equilibria
In-Koo Cho,David M. Kreps +1 more
TL;DR: In this paper, the authors present a number of formal restrictions of this sort, investigate their behavior in specific examples, and relate these restrictions to Kohlberg and Mertens' notion of stability.
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Advertising as Information
TL;DR: In this paper, the major features of the behavior of advertising can be explained by advertising's information function, and it is shown that the most important information conveyed by advertising is simply that the brand advertises.