Lambertini, Luca ; Zaccour, Georges
(2014)
Inverted-U aggregate investment curves in a dynamic game of advertising.
Bologna:
Dipartimento di Scienze economiche,
p. 21.
DOI 10.6092/unibo/amsacta/4047.
In: Quaderni - Working Paper DSE
(954).
ISSN 2282-6483.
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Abstract
We revisit the relationship between market power and firms' investment incentives in a noncooperative differential oligopoly game in which firms sell differentiated goods and invest in advertising to increase the brand equity of their respective goods. The feedback equilibrium obtains under open-loop rules, and aggregate expenditure on goodwill takes an inverted-U shape under both Cournot and Bertrand behaviour, provided product differentiation is sufficiently high. Total industry expenditure is higher under Cournot competition.
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