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Informative externalities and pricing in regulated multiproduct industries

Article Abstract:

A study was conducted on how to organize a two-product industry supporting interdependent demands when the regulator cannot monitor the demand level of goods. A couple of industry structures were compared, namely a multiproduct monopoly and a differentiated duopoly. The informative costs of regulation were also examined. Results indicated that when goods are substitutes, the regulator may realize an improved performance by integrating production.

Pricing Policy, Economic aspects, Pricing, Industry, Industries

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Informative advertising competition

Article Abstract:

A study was conducted on a Hotelling duopoly in which costs are variable and considered private information. Results show that the use of informative price advertising increases social welfare as well as a company's expected earnings. Advertising, however, was not found to boost competitiveness in an environment where product information is known to consumers, where uncertainty concerning costs exists and where market size is fixed.

Analysis, Competition (Economics), Advertising, Consumer education

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