Achieving the optimal balance between investment in quality and investmentin self-promotion for information products

When producers of goods (or services) are confronted by a situation in whic h their offerings no longer perfectly match consumer preferences, they must determine the extent to which the advertised features of the product refle ct the product's actual attributes. We find that the two important determin ants of sellers' advertising strategy are the Repeg Cost Ratio, and the Rep eat Sales Coefficient. The interplay of these two factors gives rise to fou r possible strategic scenarios. We show that sellers' strategy is clearly e xplainable in three out of these four scenarios. In the ambiguous fourth sc enario, we show that sellers' strategy for information production goods wil l differ considerably from information consumption goods based on product c omplexity and cost of product return (borne by the buyer). Finally, we demo nstrate that markets are often characterized by self-reinforcing limits on the extent of opportunistic advertising by sellers.