Informative advertisement of partial compatible products
Product design and advertisement strategy have been theoretically studied as separate firms decisions. In the present paper, we look at the link between advertisement and product design and we analyze how firms’ advertising decisions influence the market effect of product design. We consider a model...
- Autores:
- Tipo de recurso:
- Fecha de publicación:
- 2014
- Institución:
- Universidad del Rosario
- Repositorio:
- Repositorio EdocUR - U. Rosario
- Idioma:
- eng
- OAI Identifier:
- oai:repository.urosario.edu.co:10336/29845
- Acceso en línea:
- https://repository.urosario.edu.co/handle/10336/29845
- Palabra clave:
- Informative advertisement
Product design
Partial compatibility
Welfare
- Rights
- License
- http://purl.org/coar/access_right/c_abf2
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Informative advertisement of partial compatible productsPublicidad informativa de productos parcialmente compatiblesInformative advertisementProduct designPartial compatibilityWelfareProduct design and advertisement strategy have been theoretically studied as separate firms decisions. In the present paper, we look at the link between advertisement and product design and we analyze how firms’ advertising decisions influence the market effect of product design. We consider a model of informative advertisement where two firms produce a bundle of complementary products which are partially compatible. A product design with more compatible components is associated with a larger intensity of advertisement. Higher compatibility reduces competition between firms, which incentivizes them to give factual information about their bundle. Like Matutes and Regibeau (1988), industry profit and total welfare is maximized with full product compatibility. However, contrary to them, we obtain that consumer surplus is not monotone with the level of product compatibility and its maximum is attained with partial compatibility. Moreover, because consumer surplus not only depends on the equilibrium prices but also on the intensity of advertisement, we find that for intermediate equilibrium levels of advertising, consumers prefer fully compatible components rather than full incompatibility. As a result, a more compatible product design benefits all the agents in the economy.Toulouse School of Economics2014-03-262020-09-11T21:05:39Zinfo:eu-repo/semantics/preprinthttp://purl.org/coar/version/c_b1a7d7d4d402bccehttp://purl.org/coar/resource_type/c_816bapplication/pdfhttps://repository.urosario.edu.co/handle/10336/29845TSE Working Papersinstname:Universidad del Rosarioreponame:Repositorio Institucional EdocURenghttp://publications.ut-capitole.fr/id/eprint/15876http://purl.org/coar/access_right/c_abf2Roig Roig, Guillemoai:repository.urosario.edu.co:10336/298452022-07-15T03:03:19Z |
dc.title.none.fl_str_mv |
Informative advertisement of partial compatible products Publicidad informativa de productos parcialmente compatibles |
title |
Informative advertisement of partial compatible products |
spellingShingle |
Informative advertisement of partial compatible products Informative advertisement Product design Partial compatibility Welfare |
title_short |
Informative advertisement of partial compatible products |
title_full |
Informative advertisement of partial compatible products |
title_fullStr |
Informative advertisement of partial compatible products |
title_full_unstemmed |
Informative advertisement of partial compatible products |
title_sort |
Informative advertisement of partial compatible products |
dc.subject.none.fl_str_mv |
Informative advertisement Product design Partial compatibility Welfare |
topic |
Informative advertisement Product design Partial compatibility Welfare |
description |
Product design and advertisement strategy have been theoretically studied as separate firms decisions. In the present paper, we look at the link between advertisement and product design and we analyze how firms’ advertising decisions influence the market effect of product design. We consider a model of informative advertisement where two firms produce a bundle of complementary products which are partially compatible. A product design with more compatible components is associated with a larger intensity of advertisement. Higher compatibility reduces competition between firms, which incentivizes them to give factual information about their bundle. Like Matutes and Regibeau (1988), industry profit and total welfare is maximized with full product compatibility. However, contrary to them, we obtain that consumer surplus is not monotone with the level of product compatibility and its maximum is attained with partial compatibility. Moreover, because consumer surplus not only depends on the equilibrium prices but also on the intensity of advertisement, we find that for intermediate equilibrium levels of advertising, consumers prefer fully compatible components rather than full incompatibility. As a result, a more compatible product design benefits all the agents in the economy. |
publishDate |
2014 |
dc.date.none.fl_str_mv |
2014-03-26 2020-09-11T21:05:39Z |
dc.type.none.fl_str_mv |
info:eu-repo/semantics/preprint |
dc.type.coarversion.fl_str_mv |
http://purl.org/coar/version/c_b1a7d7d4d402bcce |
dc.type.coar.fl_str_mv |
http://purl.org/coar/resource_type/c_816b |
dc.identifier.none.fl_str_mv |
https://repository.urosario.edu.co/handle/10336/29845 |
url |
https://repository.urosario.edu.co/handle/10336/29845 |
dc.language.none.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
http://publications.ut-capitole.fr/id/eprint/15876 |
dc.rights.coar.fl_str_mv |
http://purl.org/coar/access_right/c_abf2 |
rights_invalid_str_mv |
http://purl.org/coar/access_right/c_abf2 |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Toulouse School of Economics |
publisher.none.fl_str_mv |
Toulouse School of Economics |
dc.source.none.fl_str_mv |
TSE Working Papers instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR |
instname_str |
Universidad del Rosario |
institution |
Universidad del Rosario |
reponame_str |
Repositorio Institucional EdocUR |
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Repositorio Institucional EdocUR |
repository.name.fl_str_mv |
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repository.mail.fl_str_mv |
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1803710394407059456 |