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Colombo, Luca ; Lambertini, Luca
(2002)
Dynamic Advertising under Vertical
Product Differentiation.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 19.
DOI 10.6092/unibo/amsacta/4839.
In: Quaderni - Working Paper DSE
(456).
ISSN 2282-6483.
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Abstract
We investigate a dynamic advertising model where product quality is endogenous. In the differential game between single-product firms, there exists a parameter range where the low-quality firm uses a more efficient advertising technology and earns higher profits than the rival. Moreover, we show that equilibrium qualities are the same under duopoly, multiproduct monopoly and social planning, the only distortion being concerned with output levels.
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