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Persuading consumers with social attitudes


Buehler, Stefan; Halbheer, Daniel (2012). Persuading consumers with social attitudes. Journal of Economic Behavior & Organization, 84(1):439 - 450.

Abstract

This paper provides a formal analysis of persuasive advertising when firms compete for consumers with heterogenous social attitudes towards the consumption by others. Deriving product demand from primitives, we show that the demand-enhancing effect of persuasive advertising varies across consumers and increases in the average degree of conformity. In equilibrium, both quality and cost leaders choose higher advertising intensities and charge higher prices than their competitors. In addition, we show that an increase in the average degree of conformity among consumers reinforces asymmetries between firms.

This paper provides a formal analysis of persuasive advertising when firms compete for consumers with heterogenous social attitudes towards the consumption by others. Deriving product demand from primitives, we show that the demand-enhancing effect of persuasive advertising varies across consumers and increases in the average degree of conformity. In equilibrium, both quality and cost leaders choose higher advertising intensities and charge higher prices than their competitors. In addition, we show that an increase in the average degree of conformity among consumers reinforces asymmetries between firms.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2012
Deposited On:11 Dec 2012 13:52
Last Modified:05 Apr 2016 16:10
Publisher:Elsevier
Series Name:Journal of Economic Behavior & Organization
ISSN:0167-2681
Publisher DOI:https://doi.org/10.1016/j.jebo.2012.04.013
Other Identification Number:merlin-id:7650

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