This dissertation, in its most general context, is an investigation into the
modeling of markets with imperfectly informed agents. In such markets, there will
invariably be incentives for informed agents to take advantage of information
asymmetries by disseminating the relevant information to uninformed agents. Similarly,
there will be incentives for uniformed agents to reduce the adverse effects of information
asymmetries by acquiring the relevant information. The primary purpose of this
dissertation is to demonstrate that the understanding of such markets can be greatly
enhanced by explicit modeling both channels of information flow as omitting either
channel could eliminate important interaction effects.
The arguments in this dissertation are narrowly framed within a familiar
differentiated market in which firms advertise and each consumer is imperfectly
informed about which product is most suited to his taste. However, the conclusions
drawn in the dissertation are applicable to more general economic systems in which it is
costly for agents to acquire information relevant to the decision-making process.
There is a long-standing debate in the literature about whether or not advertising
is purely informative. Although there is extensive research on advertising models and
consumer search models, little is known about differentiated markets in which firms
advertise and consumers search. In modeling advertising and consumer search, this
dissertation questions the relevance of two pieces of evidence that have been offered
against the view that advertising is informative.
In the first instance, I demonstrate that firms may use purely informative
advertising and still maintain market power in the long-run in monopolistically competitive markets; this finding thus rejects the argument that firms rely on
manipulating consumer preferences in order to maintain market power in these markets.
In the second instance, I demonstrate that advertisements without any information about
the product being advertised may still be informative to some consumers; this finding
thus rejects the argument that the widespread use of uninformative television
advertisements is inconsistent with the view that advertising is informative in nature.
This dissertation shows that our understanding of the nature of advertising
(information dissemination mechanism) is greatly enhanced by modeling consumer
search (information acquisition mechanism).
| Identifer | oai:union.ndltd.org:tamu.edu/oai:repository.tamu.edu:1969.1/2558 |
| Date | 01 November 2005 |
| Creators | Harriott, Kevin Kenton |
| Contributors | Hwang, Hae-Shin |
| Publisher | Texas A&M University |
| Source Sets | Texas A and M University |
| Language | en_US |
| Detected Language | English |
| Type | Book, Thesis, Electronic Dissertation, text |
| Format | 304385 bytes, electronic, application/pdf, born digital |
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