The Monopolist’s Optimal Allocation of Advertising and Pricing under the Threat of the Potential Firm

• Main Authors: Ching-wei Lee, 李景威
• Other Authors: Tru-Gin Liu
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/33023637565845869220

碩士 === 國立中山大學 === 經濟學研究所 === 99 === This article aims at exploring how the monopolist determines the optimal allocation of advertising and pricing when he faces the threat of the potential firm entering the market. When consumers are unable to distinguish the quality of a commodity, they will use the weighted average willingness to pay of the high quality and the low quality goods to be the willingness to pay for the commodity. Because that the average willingness to pay is different among consumers of different types, thus the monopolist’s decisions concerning the allocation of advertising budget and pricing will be influenced. We found that no matter what the average willingness to pay is, as long as the monopolist has the ability to compete against price, the expenditure on advertising will be larger; otherwise, the expenditure on advertising will be smaller.