Abstract
Economists have long believed that product differentiation is an important determinant of market behavior (e.g., Chamberlin, 1950; Bain, 1956), but economists have not been very successful in giving this concept operational meaning.1 One reason for this lack of success is that economists have not focused on one of the key elements of product differentiation: the consumer’s acquisition of information about product quality. I show in this paper that product differentiation will have quite different consequences on market behavior given different ways in which consumers obtain their information. These theoretical results are then supported by substantial empirical evidence.
The findings reported herein have not yet undergone the full NBER critical review.
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References
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© 1981 Martinus Nijhoff Publishing
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Nelson, P.J. (1981). Consumer Information and Advertising. In: Galatin, M., Leiter, R.D. (eds) Economics of Information. Social Dimensions of Economics, vol 3. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-8168-3_5
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DOI: https://doi.org/10.1007/978-94-009-8168-3_5
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-009-8170-6
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