Non‐Comparative and Comparative Advertising in Oligopolistic Markets

Abstract

We study firms’ advertising strategies in an oligopolistic market in which both non‐comparative and comparative advertising are present. We show that in equilibrium firms mix over the two types of advertising, with the intensity of comparative advertising exceeding that of non‐comparative advertising; moreover, that the intensity of comparative increases relatively to non‐comparative advertising as market competition intensifies. Interestingly, the use of comparative advertising may lead to higher consumers’ surplus and welfare in a mixed advertising market than in the absence of advertising or when either comparative or non‐comparative advertising is not present.