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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/26026

Title: Information Gathering and Marketing
Authors: Bar-Isaac, Heski
Caruana, Guillermo
Cunat, Vicente
Keywords: information gathering
monopoly
marketing
pricing
investment
Issue Date: Apr-2008
Series/Report no.: EC-08-17
Abstract: Consumers have only partial knowledge before making a purchase decision, but can choose to acquire more detailed information. A Örm can make it easier or harder for these consumers to obtain such information. We explore consumersíinformation gathering and the Örmís integrated strategy for marketing, pricing, and investment in quality. In particular, we highlight that when consumers are ex-ante heterogeneous, the Örm might choose an intermediate marketing strategy for two quite di§erent reasons. First, it serves as a non-price means of discriminationó it can make information only partially available, in a way that induces some, but not all, consumers to acquire the information. Second, when the Örm cannot commit to a given investment in quality, it can still convince all consumers of its provision by designing a pricing and marketing policy that induces some consumers to actively gather further information. This mass of consumers, in exchange, is su¢ ciently large to discipline the monopolist to invest in the quality of the product.
URI: http://hdl.handle.net/2451/26026
Appears in Collections:Economics Working Papers

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