Advertising competition with market expansion for finite horizon firms

    Authors

    F. M. Bass; A. Krishnamoorthy; A. Prasad;S. P. Sethi

    Comments

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    Abbreviated Journal Title

    J. Ind. Manag. Optim.

    Keywords

    marketing; advertising; differential games; optimal control; dynamic; duopoly; OPERATIONS-RESEARCH; MODEL; GAME; Engineering, Multidisciplinary; Operations Research & Management; Science; Mathematics, Interdisciplinary Applications

    Abstract

    Firms that want to increase the sales of their brands through advertising have the choice of capturing market share from their competitors through brand advertising, or increasing primary demand for the category through generic advertising. In this paper, differential game theory is used to analyze the effects of the two types of advertising decisions made by firms offering a product in a dynamic duopoly. Each firm's sales depend not only on its own and its competitor's brand advertising strategies, but also on the generic advertising expenditures of the two firms. Closed-loop Nash equilibrium solutions are obtained for symmetric and asymmetric competitors in a finite-horizon setting. The analysis for the symmetric case results in explicit solutions, and numerical techniques are employed to solve the problem for asymmetric firms.

    Journal Title

    Journal of Industrial and Management Optimization

    Volume

    1

    Issue/Number

    1

    Publication Date

    1-1-2005

    Document Type

    Article

    Language

    English

    First Page

    1

    Last Page

    19

    WOS Identifier

    WOS:000240804200003

    ISSN

    1547-5816

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