EconPapers    
Economics at your fingertips  
 

Advertising and endogenous exit in a differentiated duopoly

Andrea Mantovani () and Giordano Mion ()

Recherches économiques de Louvain, 2006, vol. 72, issue 1, 19-48

Abstract: In this paper we consider a two-stage duopoly game 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.

Keywords: advertising; product differentiation; endogenous exit; asymmetric equilibria; coordination games (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.cairn.info/load_pdf.php?ID_ARTICLE=REL_721_0019 (application/pdf)
http://www.cairn.info/revue-recherches-economiques-de-louvain-2006-1-page-19.htm (text/html)
free

Related works:
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006) Downloads
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006) Downloads
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006) Downloads
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2003) Downloads
Working Paper: Advertising and Endogenous Exit in a Differentiated Duopoly (2002) Downloads
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:cai:reldbu:rel_721_0019

Access Statistics for this article

More articles in Recherches économiques de Louvain from De Boeck Université
Bibliographic data for series maintained by Jean-Baptiste de Vathaire ().

 
Page updated 2019-10-22
Handle: RePEc:cai:reldbu:rel_721_0019