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|Title: ||Signaling advertising by multiproduct firms|
|Authors: ||Pires, Cesaltina|
|Keywords: ||Quality signaling|
|Issue Date: ||2011|
|Abstract: ||We consider the use of advertising expenses as quality signals in multiproduct firms, extending previous results on single product firms. In our model, a firm introduces sequentially two products whose qualities are positively correlated.We investigate whether there exist information spillovers from the first to the second market. We show that, when correlation is high, the equilibrium in market 2 depends on the quality reputation the firm has gained in market 1. Moreover, if a firm with a
high-quality product 1 wants to separate from its low-quality counterpart, it needs to
advertise more in this market than if the qualities of the two products are unrelated.
This advertising level signals not only high quality in the first market, but also the likely quality of the second product. Thus, advertising in the first market has information spillovers in the second market.|
|Appears in Collections:||GES - Publicações - Artigos em Revistas Internacionais Com Arbitragem Científica|
CEFAGE - Publicações - Artigos em Revistas Internacionais Com Arbitragem Científica
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