Handbook of Media Economics, vol 1A

informative advertising than on directly informative advertising. This is because it is the

amount spent on the former that conveys the information whereas ads that contain direct

information merely need to reach consumers once. He finds some empirical support for

this view by providing some empirical evidence that ad expenditures for experience

goods are much larger than for search goods. The substantial theoretical investigations

on this issue do not fully confirm Nelson’s predictions. If prices may be used to signal

a product’s high quality (in particular through introductory offers), they often achieve

this objective more effectively than massive advertising expenditures. If high quality is

more costly to produce than low quality, it may even ...