Advertising and Endogenous Exit in a Differentiated Duopoly

Andrea Mantovani and Giordano Mion

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In this paper we consider a duopoly two-stage duopoly where firms first decide whether to invest in advertising and then compete in prices. Advertising has two effects: a market enlargement for both firms and a predatory gain for the investing firm only. Both symmetric and asymmetric equilibria may arise. The two most interesting cases are a coordination game where both firms investing and non-investing are equilibria, and a chicken game where only one firm invests while the other is possibly driven (endogenously) out of the market. Our results suggest that product differentiation has an ambiguous impact on investment in advertising and that strong product substitutability may induce a coordination problem.

Date: 2002
New Economics Papers: this item is included in nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://amsacta.unibo.it/4840/1/455.pdf (application/pdf)

Related works:
Journal Article: Advertising and endogenous exit in a differentiated duopoly (2006)
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006)
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006)
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006)
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:455

Access Statistics for this paper

More papers in Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna Contact information at EDIRC.
Bibliographic data for series maintained by Dipartimento Scienze Economiche, Universita' di Bologna ().