Pastine, Tuvana
(2002)
Consumption Externalities, Coordination, and
Advertising.
The International Economic Review, 43 (3).
pp. 919-943.
ISSN 0020-6598
Abstract
The aim of this article is to demonstrate that advertising can have an important
function in markets with consumption externalities apart from its persuasive and
informative roles. We show that advertising may function as a device to
coordinate consumer expectations of the purchasing decisions of other consumers
in markets with consumption externalities. The implications of advertising as
a coordinating device are examined in the pricing and advertising decisions of
firms interacting strategically. Although, at times, the one-period advertising
expense can exceed the one-period monopoly profit, in equilibrium, consumers
will pay a premium for the more heavily advertised brand.
| Item Type: |
Article
|
| Keywords: |
Consumption; Externalities; Coordination;
Advertising; |
| Academic Unit: |
Faculty of Social Sciences > Economics, Finance and Accounting |
| Item ID: |
8501 |
| Identification Number: |
https://doi.org/10.1111/1468-2354.t01-1-00041 |
| Depositing User: |
Tuvana Pastine
|
| Date Deposited: |
25 Jul 2017 14:04 |
| Journal or Publication Title: |
The International Economic Review |
| Publisher: |
Wiley |
| Refereed: |
Yes |
| URI: |
|
| Use Licence: |
This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available
here |
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