Marketing cooperation for differentiated products

Martin Peitz

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In a three-stage duopoly game with product design at stage 1, advertising & marketing at stage 2, and price competition at stage 3, advertising & marketing enable customers to distinguish the goods from each other thus relaxing price competition. The subgame perfect equilibria of the three stage Hotelling-type model are characterized under two institutional arrangements: independant decision making at stage 2 or a joint marketing organization. The two firms will gain hum marketing cooperation implying more expenditure on advertising & marketing due to the specification of the model that both firms benefit from advertising & marketing of either firm.

Keywords: Informative advertising; spatial competition; product differentiation; marketing cooperation (search for similar items in EconPapers)
JEL-codes: D43 L13 M37 (search for similar items in EconPapers)
Pages: 32 pages
Date: 1996-02
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1996-03

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