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New And Improved -
K. Bagwell, Garey Ramey (1993)
Advertising as Information: Matching Products to BuyersJournal of Economics and Management Strategy, 2
- Publisher
- Wiley
- Copyright
- Copyright © 1994 Wiley Subscription Services, Inc., A Wiley Company
- ISSN
- 1058-6407
- eISSN
- 1530-9134
- DOI
- 10.1111/j.1430-9134.1994.00561.x
- Publisher site
- See Article on Publisher Site
Abstract
A model of advertising is presented in which consumption experience is an imperfect indicator of product quality. In equilibrium, neither price nor advertising signal the quality of newly introduced goods. Advertising of established products can be a signal of quality, but if it is, it must be an imperfect signal leaving residual uncertainty that influences consumers’ repurchase decision. A set of observable implications follow.
Journal
Journal of Economics & Management Strategy – Wiley
Published: Sep 1, 1994