ike a signal to potential consumers, that the firm believes that its product has good quality. Furthermore the company believes that because of its good quality products, is going to make repeat sales for a long time in order to recoup the fixed costs of initial advertising. On the other hand, firms with poor quality products that know that consumers will soon discover they have been misled about quality, do not invest much in advertising. This is a very good source of information for consumers because in that way they can realize the difference between firms, which advertise much and firms which, do not advertise so much. It is one of the explanations of how advertising can improve consumers information about the quality of products.In addition to this, there are some goods that have to be used for a very long time before their quality can be established by the consumers. Consumers now have a lot to gain from truthful advertising, but lying advertisers could get away with it for quite a while. Lying advertising called and hit and run advertising as well. This is a real problem for producers who know that their products are good. The only thing that they can do in order to overcome this difficulty is to raise the stakes and commit a lot of money to advertising.It is easy to understand here, that this can make sense only if they expect their product to be successful for a very long time, long enough for the consumers to find out that the product is really good.Furthermore, there are some goods that usually they are not going to be replaced for a decade or more (once-off purchase). The question that may arise here is how a consumer can discover the quality of such a good. In that occasion a producer who knows that his products are good, has no reason to advertise. So, as we can understand a willingness to advertise no longer signals that the product must be in high quality.To sum up we can say that it is very common for producers who prod...
