The strategic effect of retailers' in-store advertising services under product variety competition

Haruki Kobayashi, Nobuo Matsubayashi

Research output: Contribution to journalArticlepeer-review

Abstract

We study a retailer service model of in-store advertising, in which a neutral retailer provides product information to consumers for free but charges manufacturers. Our results show that the retailer's optimal pricing induces the manufacturers to decrease the number of items they offer. Nevertheless, this relaxes the competition between the manufacturers so that they benefit from using the in-store service, unless the cost of communicating with consumers about the between-firm products is lower. Furthermore, the service can be made socially beneficial by reducing the inefficiency resulting from an excessive number of items when manufacturers are not well differentiated.

Original languageEnglish
JournalManagerial and Decision Economics
DOIs
Publication statusPublished - 2019 Jan 1

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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