An Advertising Model of Duopoly with Consumer Searching

Abstract

Aiming at the problem that the Tirole(1997)'s analysis of informative advertising ,with the two-phase gaming model applied to it. This paper puts forward the informative advertising model based on consumers' information searching in which consumers have heterogeneous preferences, and consumers' costs of information searching can influence the product price and advertising level of enterprises. In the discussion of model equilibrium, the conclusions are: when high discovery cost, in equilibrium, duopoly have the same price and advertising level will increase firstly then decrease if the reservation value increases.