The digital economy and advertising diffusion models: Critical mass and the Stalling equilibrium

Gustav Feichtinger, Dieter Grass, Richard F. Hartl, Peter Kort and Andrea Seidl

European Journal of Operational Research, 2024, vol. 318, issue 3, 966-978

Abstract: In the digital economy it is frequently observed that products become more valuable the larger is the number of people that use it. To account for such network effects, we introduce a new diffusion equation in a dynamic model of the firm with the aim to obtain the advertising policy that maximizes firm profits. Also an advertising budget is introduced.

Keywords: OR in marketing; Network effects; Critical mass; Optimal control (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:318:y:2024:i:3:p:966-978

DOI: 10.1016/j.ejor.2024.05.043

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