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- Publisher
- Wiley
- Copyright
- Copyright © 1994 Wiley Subscription Services, Inc., A Wiley Company
- ISSN
- 1058-6407
- eISSN
- 1530-9134
- DOI
- 10.1111/j.1430-9134.1994.00545.x
- Publisher site
- See Article on Publisher Site
Abstract
We investigate the role of price advertising in a market where consumers are imperfectly informed about prices. We consider a monopolist whose demand depends on price and advertising expenditure. This demand function is derived from optimizing behavior of consumers. Uninformed consumers may pay a cost to visit the seller and obtain price information. Advertising enables the monopolist to increase the number of informed consumers. In equilibrium the uninformed consumers form rational price expectations, and the seller necessarily adopts a random pricing and advertising strategy.
Journal
Journal of Economics & Management Strategy – Wiley
Published: Sep 1, 1994