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Persuading Consumers With Social Attitudes

Stefan Bühler & Daniel Halbheer

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.
   
type journal paper
   
keywords Advertising, Social attitude, Consumption externality, Quality
   
language English
kind of paper journal article
date of appearance 9-2012
journal Journal of Economic Behavior and Organization
publisher Elsevier (Amsterdam)
ISSN 0167-2681
ISSN (online) 1879-1751
DOI 10.1016/j.jebo.2012.04.013
volume of journal 84
number of issue 1
page(s) 439-450
review not reviewed
   
citation Bühler, S., & Halbheer, D. (2012). Persuading Consumers With Social Attitudes. Journal of Economic Behavior and Organization, 84(1), 439-450, DOI:10.1016/j.jebo.2012.04.013.