TY - UNPB

T1 - "We sold a million copies"

T2 - The Role of Advertising Past Sales

AU - Monteiro, Paolo Klinger

AU - Moraga Gonzalez, Jose Luis

N1 - JEL Classification: D82, L15, M37

PY - 1999

Y1 - 1999

N2 - 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.

AB - 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.

KW - Faculty of Social Sciences

KW - two-sided quality uncertainty, past-sales advertis

M3 - Working paper

BT - "We sold a million copies"

PB - Department of Economics, University of Copenhagen

CY - Cph.

ER -