Advertising Policy and Returns to Scale in Markets Where Information is Passed between Individuals

The purpose of this paper is to develop a model concerning an aspect of the theory of advertising which has received relatively little formal analysis in the literature. The model postulates an approach that an advertiser who wishes to introduce certain products or services might take in order to determine an optimal strategy. It also suggests a mechanism which may help in understanding why it is that apparently similar organizations which continually introduce apparently indistinguishable variants of a product (cigarettes for example) find that a few are huge successes whilst the majority fail and why repeated