EconPapers    
Economics at your fingertips  
 

Advertising and endogenous exit in a differentiated duopoly

Andrea Mantovani () and Giordano Mion ()

No 2006012, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: In this paper we consider a two-stage duopoly game where fîrrns first decide whether to invest in advertising and then compete in prices. Advertising has two effects : a market enlargement for both firms and a predatory gain for the investing firm only. Both symmetric and asymmetric equilibria may arise. The two most interesting cases are a coordination game where both firms investing and non-investing are equilibria. and a chicken game where only one firm invests while the other is possibly driven (endogenously) out of the market. Our results suggest that product differentiation has an ambiguous impact on investinent in advertising and that strong product substitutability may induce a coordination problem.

Keywords: Advertising; product differenciation; endogenous exit; asymmetric equilibria; coordination games (search for similar items in EconPapers)
JEL-codes: D64 E24 J22 (search for similar items in EconPapers)
Date: 2006-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://sites.uclouvain.be/econ/DP/REL/2006012.pdf (application/pdf)

Related works:
Journal Article: Advertising and endogenous exit in a differentiated duopoly (2006) Downloads
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006) Downloads
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2006) Downloads
Working Paper: Advertising and endogenous exit in a differentiated duopoly (2003) Downloads
Working Paper: Advertising and Endogenous Exit in a Differentiated Duopoly (2002) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvre:2006012

Access Statistics for this paper

More papers in Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Sebastien SCHILLINGS ().

 
Page updated 2019-11-09
Handle: RePEc:ctl:louvre:2006012