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A UNIFYING DIFFERENTIAL GAME OF ADVERTISING AND PROMOTIONS

Hassan Benchekroun ()

International Game Theory Review (IGTR), 2007, vol. 09, issue 02, 183-197

Abstract: The literature on advertising and promotions can be divided in two categories. A first group of models assume that promotion contributes (positively) to the goodwill towards the product, and a second group assumes that promotions reduce that goodwill. In this paper we build a differential game model where the impact of promotion on goodwill is endogenously determined. We conduct a comparative dynamics exercise. An unexpected result is that an increase in the sensitivity of sales to goodwill can lead to a decrease of the equilibrium level of sales.

Keywords: Marketing; advertising and promotion; differential games; marketing channel (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1142/S0219198907001357

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