Comparative and Targeted Advertising in Competitive Markets
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1 Comparative and Targeted Advertising in Competitive Markets Joanna Pousset To cite this version: Joanna Pousset. Comparative and Targeted Advertising in Competitive Markets. Sciences de l Homme et Société. ENSAE ParisTech, Français. <pastel > HAL Id: pastel Submitted on 28 May 2009 HAL is a multi-disciplinary open access archive for the deposit and dissemination of scientific research documents, whether they are published or not. The documents may come from teaching and research institutions in France or abroad, or from public or private research centers. L archive ouverte pluridisciplinaire HAL, est destinée au dépôt et à la diffusion de documents scientifiques de niveau recherche, publiés ou non, émanant des établissements d enseignement et de recherche français ou étrangers, des laboratoires publics ou privés.
2 Comparative and Targeted Advertising in Competitive Markets Joanna Pousset under the supervision of Pau Olivella Cunill Dissertation submitted to Departament d Economia i d Història Econòmica Facultat de Ciències Econòmiques i Empresarials Universitat Autònoma de Barcelona in partial fulfillment of the requirements for the degree of Doctor of Philosophy July 2008
3 Dedication This dissertation is dedicated to my family.
4 Acknowledgements It is a pleasure to thank the many people who made this thesis possible. In the first place, I would like to express my sincere gratitude to my advisor, Pau Olivella. His ability to probe beneath the text is a true gift, and his insights have strengthened this study significantly. I will always be thankful for his guidance, knowledge, dedication and remarkable patience. A special word of thanks to Prof. Ronald W. Jones, a friend, a mentor, and a cornerstone in my professional development, who made me discover the world of economics and who transmitted to me the urge to answer economic puzzles. I would like to acknowledge the help of many people during my study. This thesis has benefited greatly from valuable comments of David Pérez Castrillo and Xavier Martinez Giralt. Their discussions, encouragement and critiques were of essence to the progress of this work. I also wish to thank Dúnia López Pintado for providing inspiration for future research. I am deeply grateful to several researchers at the organisations that I visited. In particular, I would like to thank Yossi Spiegel, Simon P. Anderson, and Regis Renault for their interest in my research, detailed discussions and encouragement in the area of advertising. I extend my appreciation to researchers of CREST LEI. Special thanks are due to Laurent Linnemer, Philippe Fevrier and Thibaud Vergé. This thesis would not appear in its present form without their kind assistance, readiness to help, thoughtful advice, and trenchant critiques. I would also like to thank my co-author, Nathalie Sonnac, for enriching interaction, inspiration and fruitful discussions. I have also benefited from many insightful suggestions from the participants of the International IO Conference in Savannah, 2007, Workshops in Microeconomics at Universitat Autònoma de Barcelona, and of other conferences and seminars.
5 I am indebted to my many student colleagues of Universitat Autònoma de Barcelona for providing a stimulating and fun environment in which to learn and grow. Their true friendship has been of great importance. I am grateful to the staff of IDEA for their unconditional support, help, and their constant effort to improve the quality of the PhD program. I wish to thank my sister for helping me get through the difficult times, and for emotional support. Last but not least, I thank my husband who has been a constant source of support and patience and has helped make everything possible. The financial support from Generalitat de Catalunya, research project BEC (Spanish Ministry of Education and Science) and research grant from CREST are gratefully acknowledged.
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8 List of Figures 2.1 The positions of firms on the unit circle Market division among firms The effects of the degree of comparativeness of advertising on advertising volumes among firms A and B The effects of the degree of comparativeness of advertising on advertising efforts of firms A and B against firm C The effects of the degree of comparativeness of advertising on advertising efforts of firm C against firms A and B The effects of the degree of comparativeness of advertising on the aggregate advertising efforts Possible actions of the game Demand configurations under no advertising Configurations of parameters for which the equilibrium candidate falls in the interior of case Profit functions of each firm at the optimal price of the rival Advertising decisions of firm H The impact of advertising on price competition The impact of price competition on the advertising decision of firm H Constellations of firm L's profits when her true quality is low Constellations of firm L's profits when her true quality is high An exemplary structure of the press market The demands for the industrial product as fractions of the magazines' demands The impact of readers' devotion to the product on advertising rates
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