Advertising Strategies in a Differential Game with Negative Competitor’s Interference

B. Viscolani () and Georges Zaccour
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B. Viscolani: University of Padua

Journal of Optimization Theory and Applications, 2009, vol. 140, issue 1, No 10, 153-170

Abstract: Abstract We consider a duopolistic industry where the current sales of each firm is proportional to its goodwill stock. The evolution of the latter depends positively on own advertising effort and negatively on competitor’s advertising. A standard assumption in the literature in differential games of advertising is that the players remain active throughout the whole (infinite) duration of the game. We relax this assumption and characterize the circumstances under which a firm finds it optimal to remain or exit the industry. Among other things, it is shown that, if both players are “strong”, then the unique Nash equilibrium is the same that one would obtain in the absence of interference from competitor’s advertising.

Keywords: Differential games; Advertising; Optimal control; Nash equilibrium (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10957-008-9454-7

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