Production and Advertising in a Dynamic Hotelling Monopoly

Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: I characterise the dynamics of capacity accumulation and investment in advertising in a spatial monopoly model, contrasting the socially optimal behavior of a benevolent planner against the behaviour of a profit-maximising monopolist. I show that, in steady state, the monopolist always distorts both kinds of investment as compared to the social optimum, except in a situation where the Ramsey equilibrium prevails under both regimes.

Date: 2001
New Economics Papers: this item is included in nep-mic and nep-mkt
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:395

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