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Momentum in dynamic contests

Nicolas de Roos () and Yianis Sarafidis

Economic Modelling, 2018, vol. 70, issue C, 401-416

Abstract: We consider a two-player advertising race subject to momentum. Momentum is modeled as a complementarity between current and past campaign spending in a way that is reminiscent of models of addiction and habit formation: the more effective a player’s past spending has been, the more effective her future spending will be. For symmetric races in which the effectiveness of spending is of the Cobb-Douglas form, we derive analytic solutions for the equilibrium path. Our theory rationalizes alternative campaign strategies including aggressive openings and the development of a warchest for a final campaign assault.

Keywords: Momentum; Differential games; Advertising games; Political campaigns (search for similar items in EconPapers)
JEL-codes: C73 M37 P16 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ecmode:v:70:y:2018:i:c:p:401-416