Production and Advertising in a Dynamic Hotelling Monopoly

Lambertini, Luca (2001) Production and Advertising in a Dynamic Hotelling Monopoly. DOI 10.6092/unibo/amsacta/680.

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Abstract

I characterise the dynamics of capacity accumulation and investment in advertising in a spatial monopoly model, contrasting the socially optimal behaviour of a benevolent planner against the behaviour of a profit-maximising monopolist. I show that, in steady state, the monopolist always distorts both kinds of investment as compared to the social optimum, except in a situation where the Ramsey equilibrium prevails under both regimes.

Abstract

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Monografia (Working paper)

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