Persuasive advertising under Bertrand competition: A differential game

✍ Scribed by Roberto Cellini; Luca Lambertini; Andrea Mantovani

• Publisher: Elsevier Science
• Year: 2008
• Tongue: English
• Weight: 219 KB
• Volume: 36
• Category: Article
• ISSN: 0167-6377
• DOI: 10.1016/j.orl.2007.08.003

✦ Synopsis

We investigate a linear state differential game of advertising, under Cournot and Bertrand competition. A unique saddlepoint equilibrium exists if the marginal cost of advertising is sufficiently low. Bertrand competition entails more intense advertising than Cournot competition, since increasing market size is more important to firms when competition is tough.