Non-comparative versus Comparative Advertising of Quality

Emons, Winand; Fluet, Claude (2012). Non-comparative versus Comparative Advertising of Quality. International Journal of Industrial Organization, 30(4), pp. 352-360. Elsevier 10.1016/j.ijindorg.2012.01.004

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Text advertising__01_2012.pdf - Accepted Version Available under License Publisher holds Copyright. NOTICE: this is the author’s version of a work that was accepted for publication in International Journal of Industrial Organization. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Journal of Industrial Organization (30/4, July 2012) DOI 10.1016/j.ijindorg.2012.01.004 Download (378kB) | Preview

Two firms produce a good with a horizontal and a vertical character-
istic called quality. The difference in the unobservable quality levels
determines how the firms share the market. We consider two scenar-
ios: In the first one, firms disclose quality; in the second one, they
send costly signals thereof. Under non-comparative advertising a firm
advertises its own quality, under comparative advertising a firm adver-
tises the quality differential. In either scenario, under comparative ad-
vertising the firms never advertise together which they may do under
non-comparative advertising. Moreover, under comparative advertis-
ing firms do not advertise when the informational value to consumers
is small.

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