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

Luca Lambertini () and Georges Zaccour

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We revisit the relationship between market power and firms' investment incentives in a noncooperative differential oligopoly game in which 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.

JEL-codes: C73 L13 M37 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth and nep-mkt
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Journal Article: Inverted-U aggregate investment curves in a dynamic game of advertising (2015) Downloads
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