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A Note on Socially Insufficient Advertising in Tirole’s Duopoly Model

Creane, Anthony (2019): A Note on Socially Insufficient Advertising in Tirole’s Duopoly Model.

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Abstract

In his textbook Tirole (1988, pp. 291-294) presents a model of advertising with Hotelling duopolists. It has been inferred (e.g., Bagwell, 2007) that in the competitive equilibrium derived, there can be socially too little advertising. It is shown that given the assumptions in Tirole (1988), there cannot be socially too little advertising for this equilibrium.

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