Inverted-U aggregate investment curves in a dynamic game of advertising

Luca Lambertini () and Georges Zaccour

Economics Letters, 2015, vol. 132, issue C, 34-38

Abstract: We revisit the relationship between market power and firms’ investment incentives in a noncooperative differential oligopoly game where firms sell differentiated goods and invest in advertising to increase the brand equity of their respective goods. The feedback equilibrium obtains under open-loop rules, and aggregate expenditure on goodwill takes an inverted-U shape under both Cournot and Bertrand behaviour, provided product differentiation is sufficiently high. Total industry expenditure is higher under Cournot competition.

Keywords: Goodwill; Oligopoly; Advertising; Differential games (search for similar items in EconPapers)
JEL-codes: C73 L13 M37 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Working Paper: Inverted-U aggregate investment curves in a dynamic game of advertising (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:132:y:2015:i:c:p:34-38

DOI: 10.1016/j.econlet.2015.04.010

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