Chap. 17

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Chap. 17

  1. 1. Chapter 17 Monopolistically Competition The Debate over Advertisement
  2. 2. The critique of advertising <ul><li>Control people’s tastes </li></ul><ul><li>More psychological than informational </li></ul><ul><li>Convince people than their product is unique and efficient although it might not be true </li></ul>
  3. 3. The Defense of Advertisement <ul><li>Provide information to customers, so that they can make better choices </li></ul><ul><li>Make market more competitive </li></ul>
  4. 4. Does advertisement means quality? <ul><li>Economist says that advertisement means that it ensures quality. </li></ul><ul><li>Rational theory is that firms who are confident about the quality of their products advertise </li></ul><ul><li>but firms whose product is a mediocre choose to improve the quality instead of advertising. </li></ul>
  5. 5. What do people think about advertisement
  6. 6. Brand Names <ul><li>Willingness to pay for consumers is higher for specific brand names. </li></ul><ul><li>Brand names provide consumers with information about quality when quality cannot be judged in advance </li></ul>

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