Quality uncertainty and informative advertising
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<subfield code="a">We consider a single period model where a monopolist introduces a product of uncertain quality. Before pricing and informative advertising decisions take place, the producer observes the true quality of the good while consumers receive an independent signal which is correlated with the true quality of the product. When adverting occurs in equilibrium, the adverse selection problem is mitigated. Moreover, the lower are advertising costs, the more intense is the alleviation of that problem.</subfield>
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