We sold a million units: the role of advertising past-sales
In a market where past-sales embody information about consumers' tastes, we analyze a seller's incentives to invest in a costly advertising campaign to report past-sales. If consumers are poorly informed, a pooling equilibrium with past-sales advertising obtains. Information revelation only occurs when the seller benefits from the consumers' herding behavior brought about by the advertising campaign. If consumers are better informed, a separating equilibrium with past-sales advertising arises. Information revelation always happens, either through prices or through costly advertisements.
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| Main Authors: | , |
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| Format: | Digital revista |
| Language: | English |
| Published: |
Fundação Getúlio Vargas
2003
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| Online Access: | http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0034-71402003000200004 |
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