This paper is great! or achieving the optimal balance between investment in quality and investment in self-promotion

When producers of goods (or services) are confronted by a situation in which their offerings no longer perfectly match consumer preferences, they must determine the extent to which the advertised features of the product reflect the product´s actual attributes. We find that the two important determinants of sellers´ advertising strategy are the Repeg cost ratio, R/sub p/, and the Repeat Sales Coefficient, R/sub s/. The interplay of these two factors give rise to four possible strategic scenarios. We show that sellers´ strategy is clearly explainable in three out of these four scenarios. In this ambiguous fourth scenario, we show that sellers´ strategy for information production goods will differ considerably from physical consumption and durable goods. Further, we show how network effects can play a significant role in determining sellers´ strategy in the case of some physical durable goods.