Long-run Strategic Advertising and Short-run Bertrand Competition
نویسنده
چکیده
We model and analyze strategic interaction over time in a duopoly. Each period the rms independently and simultaneously take two sequential decisions. First, they decide whether or not to advertise, then they set prices for goods which are imperfect substitutes. Not only the own, but also the other rms past advertisement e¤orts a¤ect the current sales potential of each rm. How much of this potential materializes as immediate sales, depends on current advertisement decisions. If both rms advertise, sales potentialturns into demand, otherwise part of it evaporatesand does not materialize. We determine feasible rewards and (subgame perfect) equilibria for the limiting average reward criterion. Uniqueness of equilibrium is by no means guaranteed, but Pareto e¢ ciency may serve very well as a re nement criterion for wide ranges of the advertisement costs. JEL-codes: C72, C73, L13, M31, M37.
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عنوان ژورنال:
- IGTR
دوره 17 شماره
صفحات -
تاریخ انتشار 2015