Munich Personal RePEc Archive

Dynamic Voluntary Advertising and Vertical Product Quality

Tenryu, Yohei and Kamei, Keita (2012): Dynamic Voluntary Advertising and Vertical Product Quality.

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Abstract

We investigate the dynamic relationship between advertising and product quality under duopolistic competition. By using a simplified vertical product differentiation model with voluntary advertising, we show that the firm with larger market share has a larger advertising share and that there is a positive relationship between the difference in product quality and the number of customers in an industry.

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