"We sold a million copies" The Role of Advertising Past Sales

Publikation: Working paperForskning

  • Paolo Klinger Monteiro
  • Jose Luis Moraga Gonzalez
We model a two period monopoly market with two-sided quality uncertainty. In first period, seller gathers information about consumers´ tastes upon observing its sales. In second period, seller may or may not deliver the information. If monopolist must commit either to reveal or conceal past-sales before observing them, committing to reveal is the dominant strategy whenever advertising cost is low, buyers are many and their private information is accurate. When seller can postpone advertising decision and gains experience, past-sales revelation occurs partially. In equilibrium, delivery of sales-data occurs to induce some buyers´ herding behaviour. We carry out the analysis for two different informational scenarios.
UdgiverDepartment of Economics, University of Copenhagen
Antal sider22
StatusUdgivet - 1999

Bibliografisk note

JEL Classification: D82, L15, M37

ID: 161080