Premium
Advertising in an oligopoly with differentiated goods under general demand and cost functions: A differential game approach
Author(s) -
Hattori Masahiko,
Tanaka Yasuhito
Publication year - 2021
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12376
Subject(s) - spillover effect , oligopoly , differential game , differential (mechanical device) , economics , microeconomics , strategic complements , mathematical economics , product differentiation , sequential game , game theory , advertising , mathematical optimization , mathematics , business , cournot competition , engineering , aerospace engineering
We present an analysis of advertising activities in a dynamic oligopoly with differentiated goods using a differential game approach under general demand and cost functions. The main conclusion is that the memoryless closed‐loop solution and the feedback solution are equivalent when there is no spillover effect of advertising activities. We also show that the comparison of the open‐loop solution and the memoryless closed‐loop solution depends on whether the firms’ outputs are strategic substitutes or strategic complements.