Advertising with Spillover Effects in a Differential Oligopoly Game With Differentiated Goods.

Lambertini, Luca ; Cellini, Roberto (2002) Advertising with Spillover Effects in a Differential Oligopoly Game With Differentiated Goods. Bologna: Dipartimento di Scienze economiche DSE, p. 19. DOI 10.6092/unibo/amsacta/4868. In: Quaderni - Working Paper DSE (430). ISSN 2282-6483.
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Abstract

We consider a differentiated oligopoly where firms compete a la Cournot in the market phase, and each firms may invest in advertising activity, to enlarge its market size. Each firm`s advertising effort has positive external effects on the market size of all rivals. We derive the open-loop (and the coincident closed-loop) Nash equilibrium, and the optimal behavior of a cartel involving all firms setting both quantities and advertising efforts so as to maximize joint profits. The comparative assessment of these equilibria shows that a cartel may produce a steady ste where social welfare is higher than the social welfare level associated wit the non-cooperative setting. This is due to the positive externalities from advertising activity.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Cellini, Roberto
Keywords
advertising, differential games, capital accumulation, closed loop equilibria,externalities.
Subjects
ISSN
2282-6483
DOI
Deposit date
17 Mar 2016 12:54
Last modified
17 Mar 2016 12:54
URI

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