A Dynamic Advertising Game with Market Growth

Steffen Jørgensen () and Simon Pierre Sigué ()
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Steffen Jørgensen: University of Southern Denmark
Simon Pierre Sigué: Athabasca University

A chapter in Dynamic Perspectives on Managerial Decision Making, 2016, pp 77-91 from Springer

Abstract: Abstract The paper considers a market in which two firms compete on advertising over time. Each firm can use three types of advertising: offensive advertising which attempts to attract customers from the rival firm, defensive advertising which aims at protecting a firm’s customer base from the rival’s attacks, and generic advertising to make industry sales grow. We address questions like: How should a strategy for the simultaneous use of the three types of advertising be designed? How would the resulting time paths of sales look like? The paper studies a differential game played over an infinite time horizon and provides closed-form expressions for equilibrium advertising strategies and sales rate trajectories.

Keywords: Advertising; Differential game; Lanchester-type model; Market growth (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:dymchp:978-3-319-39120-5_5

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DOI: 10.1007/978-3-319-39120-5_5

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