Non-comparative versus Comparative Advertising of Quality

Two firms produce a good with a horizontal and a vertical character- istic called quality. The difference in the unobservable quality levels determines how the firms share the market. We consider two scenar- ios: In the first one, firms disclose quality; in the second one, they send costly signals thereof. Under non-comparative advertising a firm advertises its own quality, under comparative advertising a firm adver- tises the quality differential. In either scenario, under comparative ad- vertising the firms never advertise together which they may do under non-comparative advertising. Moreover, under comparative advertis- ing firms do not advertise when the informational value to consumers is small.