Dynamic Advertising under Vertical Product Differentiation

L. Colombo and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate a dynamic advertising model where product quality is endogenous. In the differential game between single-product firms, there exists a parameter range where the low-quality firm uses a more efficient advertising technology and earns higher profits than the rival. Moreover, we show that equilibrium qualities are the same under duopoly, multiproduct monopoly and social planning, the only distortion being concerned with output levels.

Date: 2002
New Economics Papers: this item is included in nep-mic and nep-mkt
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Journal Article: Dynamic Advertising Under Vertical Product Differentiation (2003)
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