Advertising and professional services edit

Advertising provides buyers with information regarding both the availability and quality of services and, therefore, helps to reduce the costs incurred by buyers in the process of selecting the appropriate service provider (search costs). Any increase in search costs can lead buyers to reduce the extent to which they "shop around", thus, reducing the intensity of competition in the market place. Therefore, so long as it is truthful and not designed to deceive, advertising plays an important role in facilitating the competitive process and benefiting buyers.

Furthermore, advertising restrictions can also work as barriers to entry. New entrants can be prevented from aggressively pursuing both on-going and one-off buyers. It is in the interests of incumbents, who have built up a sufficient body of goodwill and consumer recognition, to curb the effectiveness of new entrantsí promotional efforts. Thus, advertising restrictions and objections to advertising being undertaken by the new entrants can solidify entrenched market positions and limit innovation. Thus, any restrictions on advertising except those preventing untruthful adverts is likely to limit competition.


25 July 2010

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Complaints procedures for buyers
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