• The business-stealing externality: Existing firms may face a negative externality as they can lose

market power and profits from the entry of a new competitor The Advertising Debate • Critique of
advertising - Manipulates people’s tastes - Psychological not informational - Tries to convince consumers
that products are more different than they truly are • Defence of advertising - Advertising provides
information to customers - Fosters competition - Advertising as a signal of quality What is Oligopoly? • A
market structure with few sellers offering a similar/identical or somewhat differentiated pro