PRODUCT COMPATIBILITY HINDERS PRE‐EMPTIVE ADVERTISING.
This paper considers competition in systems of complementary products and examines how compatibility affects the use of informative advertising by an incumbent to deter entry. Advertising increases demand for a product; customers become price sensitive and competition increases, pre‐empting new mark...
| Published in: | Economic Inquiry Vol. 58; no. 4; pp. 1663 - 1689 |
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| Format: | Article |
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Wiley-Blackwell
Oct2020
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| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=145974814&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 145974814 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Oct2020 vid: 58 iid: 4 pid: 480 pub: Wiley-Blackwell artinfo: ui: 145974814 10.1111/ecin.12887 ppf: 1663 ppct: 26 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 449KB tig: atl: PRODUCT COMPATIBILITY HINDERS PRE‐EMPTIVE ADVERTISING. aug: au: Roig, Guillem affil: Faculty of Economics, Universidad del Rosario, Bogotá, Colombia su: Consumers Technology Commercial products Deterrence (Administrative law) Standardization sug: subj: Consumers Technology Commodity Contracts Dealing Commodity Contracts Brokerage Commercial products Deterrence (Administrative law) Standardization ab: This paper considers competition in systems of complementary products and examines how compatibility affects the use of informative advertising by an incumbent to deter entry. Advertising increases demand for a product; customers become price sensitive and competition increases, pre‐empting new market entrants. However, compatibility reduces competition, so incumbent advertising becomes less effective at deterring entry and additional, costly advertising would be required to induce deterrence. Moreover, compatibility increases advertising by a potential entrant; with efficient advertising technology, consumers are informed about all products and the incumbent cannot deter entry by using additional advertising. Therefore, product standardization policies that encourage compatibility can support new market entrants by discouraging pre‐emptive advertising strategies. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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