Journal article
Advertising patterns in a dynamic oligopolistic growing market with decay
Journal of economic dynamics & control, Vol.131, p.104229
10/2021
DOI: 10.1016/j.jedc.2021.104229
Abstract
A finite-horizon Lanchester model of a (continuous-time) differential game of oligopolistic advertising is considered, and the analytical form of the unique closed-loop Nash equilibrium derived and analyzed. In contrast to previous research, the finite-horizon Lanchester model is modified to include two novel factors. First, a growing market allows us to analyze the competition for a potential market via generic advertising, with the latter giving the otherwise zero-sum-like game a public good dimension. Second, it is assumed that each firm’s market share declines in the absence of advertising efforts. The analysis investigates the Markovian (closed-loop) equilibrium calling for firms operating in a competitive growing market to invest in offensive, defensive or generic advertising in all or part of the decision horizon. In the most novel part of the paper, the non-cooperative outcome is compared to the Pareto-optimal or cooperative solution. The conclusions derived reveal significant differences in the resulting patterns of co-existence of the different dimensions of advertising over time, relative to the existing literature.
Details
- Title: Subtitle
- Advertising patterns in a dynamic oligopolistic growing market with decay
- Creators
- Rabah Amir - University of IowaDominika Machowska - University of ŁódźMichael Troege - ESCP Europe, 79, Av. de la République, 75543 Paris Cedex 11, France
- Resource Type
- Journal article
- Publication Details
- Journal of economic dynamics & control, Vol.131, p.104229
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jedc.2021.104229
- ISSN
- 0165-1889
- eISSN
- 1879-1743
- Language
- English
- Date published
- 10/2021
- Academic Unit
- Economics
- Record Identifier
- 9984380707302771
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