DP14113 A Generalized Model of Advertised Sales
|Author(s):||Sandro Shelegia, Christopher Wilson|
|Publication Date:||November 2019|
|Keyword(s):||advertising, Clearinghouse, Heterogeneity, price dispersion, Sales|
|JEL(s):||D43, L13, M3|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14113|
To better understand temporary price reductions or 'sales', this paper presents a generalized 'clearinghouse' framework of advertised sales and explores some example applications. By viewing the fi?rms as competing in utility and amending the conventional tie-break rule, we allow for multiple dimensions of fi?rm heterogeneity in complex market environments. Moreover, we i) provide original insights into the number and types of fi?rms that use sales, ii)offer new results on how fi?rm heterogeneityaffects market outcomes, iii) extend a common empirical 'cleaning' procedure, and iv) analyze a family of activities in sales markets, including persuasive advertising and obfuscation.