DP5064 | Advertising Content

Publication Date

23/05/2005

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Abstract

Empirical evidence suggests that most advertisements contain little direct information. Many do not mention prices. We analyse a monopoly firm?s choice of advertising content and the information disclosed to consumers. The firm advertises only product information, price information, or both; and prefers to convey only limited product information if possible. It is socially harmful to force it to provide full information if it has sufficient ability to parse the information imparted, but nor does it help to restrict the information voluntarily provided.