Informative advertising in monopolistically competitive markets

Firms spend a half-trillion dollars advertising each year. To model and examine the welfare effects of with heterogeneous goods Grossman Shapiro (1984) informative in monopolistic competition find that is socially excessive for large numbers sellers. However, it has been noted their equilibrium may not exist. We present tractable replacing standard assumption finite number firms continuum firms. derive conditions existence monopolistically-competitive model, insufficient. also free entry, measure set active lower than optimal one. The comparison our results shows pure-strategy, symmetric typically does exist latter if sellers large, fact which accounts different conclusions drawn two papers.