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Targeted Complementary Advertising, Market Concentration, and Consumer Welfare
註釋When advertising is a value-enhancing complement to consumption [Becker and Murphy (1993)], customization can permit firms to discriminate in advertising strategies, rather than in pricing. We investigate customized complementary advertising in a spatial model of horizontal differentiation. We show how targeted advertising may be used to differentiate products even when there is little difference in products' physical attributes. We find that as such customized or targeted advertising becomes less costly, market concentration rises. Overall consumer welfare also rises because the augmented advertising provides additional value. However, there is a distributional issue in that some consumers may be worse off.