Persuasive Advertising in Oligopoly: A Linear State Differential Game

Cellini, Roberto ; Lambertini, Luca ; Mantovani, Andrea (2006) Persuasive Advertising in Oligopoly: A Linear State Differential Game. Bologna: Dipartimento di Scienze economiche DSE, p. 14. DOI 10.6092/unibo/amsacta/4723. In: Quaderni - Working Paper DSE (564). ISSN 2282-6483.
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Abstract

We investigate a linear state differential oligopoly game with advertising, under either Cournot or Bertrand competition. We show that a unique saddlepoint equilibrium exists in both cases if the marginal cost of advertising is sufficiently low. Then, we prove that Bertrand competition entails more intense advertising than Cournot competition. This is due to the fact that enhancing reservation prices is more relevant to firms when market competition is tougher. Ultimately, this may entail that Cournot outperforms Bertrand when it comes to social welfare.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Cellini, Roberto
Lambertini, Luca
Mantovani, Andrea
Keywords
Advertising, Differential games, Oligopoly
Subjects
ISSN
2282-6483
DOI
Deposit date
29 Feb 2016 11:08
Last modified
29 Feb 2016 11:08
URI

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