Arbeitspapier

Coordination Economies

This paper considers pricing, cost-reducing investment and dissipative advertising by firms when consumers acquire price information via two information channels, observation of advertising and sequential price search. We find that advertising guides consumers to the lowest prices in the market, even when consumers have the option to search. The threat of search by advertising-uninformed consumers introduces price competition among firms, giving short-and long-run resolutions to the Diamond paradox. Higher concentration raises welfare as a consequence of coordination economies. An extension to loss-leader advertising is developed.

Sprache
Englisch

Erschienen in
Series: Discussion Paper ; No. 1148

Klassifikation
Wirtschaft

Ereignis
Geistige Schöpfung
(wer)
Bagwell, Kyle
Ramey, Garey
Ereignis
Veröffentlichung
(wer)
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
(wo)
Evanston, IL
(wann)
1995

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Bagwell, Kyle
  • Ramey, Garey
  • Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science

Entstanden

  • 1995

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