Advertising, search costs, and social welfare

Entry Facilitation by Environmental Groups

“…Firm 2 consequently attracts more consumers. We checked this idea using a model proposed by Stivers and Tremblay (2005). To arrive at a model similar to the model of Tremblay and Stivers, we replaced −e i x f (e i , e j ) by µ i (x) in (3).…”

“…Lastly, one could also envisage an EG engaging in informative advertising in the present setting. We examine this possibility using a variant of a model by Stivers and Tremblay (2005) who look at informative advertising by firms aimed at reducing consumers' search costs. We find that the EG refrains from such advertising, furthering our motivation of the use of persuasive advertising.…”

Optimal attorney advertising

“…But as Dixit and Norman (1978) recognize, altering an individual's tastes does not necessarily improve social welfare. See Stivers and Tremblay (2005) for a brief history of the social desirability of advertising. 67 Recently, Norman, Pepall, and Richards (2008) argued that there are inefficiently low levels of advertising for homogenous goods since producers can free-ride on the advertising of competitors.…”

The effect of marketing regulations on efficiency: LeChatelier versus coordination effects

“…This occurs when one firm's advertising steals customers from rival firms and attracts no new customers to the market (Bagwell 2005). If behavior is non-cooperative, each firm will ignore the negative externality that its own advertising inflicts on its rivals, and the Nash equilibrium level will exceed the joint profit-maximizing level of advertising (Stivers and Tremblay 2005). In this setting, firms face a prisoners' dilemma: each firm's dominant strategy is to advertise more than is jointly profit maximizing.…”

“…The effect of an advertising restriction is even more complex when firms compete in both price and advertising. See Stivers and Tremblay (2005), Tremblay and Tremblay (2005), and Iwasaki et al (2008) for further discussion of the price effect of advertising. 4 An important concern with these studies is that other factors may influence profit rates and stock returns over time.…”