Optimal pricing and advertising in a durable-good duopoly
Abbreviated Journal Title
Eur. J. Oper. Res.
Keywords
Control; Dynamic programming; Game theory; Marketing; Differential games; DYNAMIC DUOPOLY; DIFFERENTIAL GAME; CONSUMER DURABLES; MODEL; STRATEGIES; COMPETITION; DIFFUSION; QUALITY; Management; Operations Research & Management Science
Abstract
This paper analyzes dynamic advertising and pricing policies in a durable-good duopoly. The proposed infinite-horizon model, while general enough to capture dynamic price and advertising interactions in a competitive setting, also permits closed-form solutions. We use differential game theory to analyze two different demand specifications - linear demand and isoelastic demand - for symmetric and asymmetric competitors. We find that the optimal price is constant and does not vary with cumulative sales, while the optimal advertising is decreasing with cumulative sales. Comparative statics for the results are presented. (C) 2009 Elsevier B.V. All rights reserved.
Journal Title
European Journal of Operational Research
Volume
200
Issue/Number
2
Publication Date
1-1-2010
Document Type
Article
Language
English
First Page
486
Last Page
497
WOS Identifier
ISSN
0377-2217
Recommended Citation
"Optimal pricing and advertising in a durable-good duopoly" (2010). Faculty Bibliography 2010s. 387.
https://stars.library.ucf.edu/facultybib2010/387
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