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Momentum in dynamic contests

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  • de Roos, Nicolas
  • Sarafidis, Yianis

Abstract

We consider a two-player advertising race subject to momentum. Momentum is modeled as a complementarity between current and past campaign spending in a way that is reminiscent of models of addiction and habit formation: the more effective a player’s past spending has been, the more effective her future spending will be. For symmetric races in which the effectiveness of spending is of the Cobb-Douglas form, we derive analytic solutions for the equilibrium path. Our theory rationalizes alternative campaign strategies including aggressive openings and the development of a warchest for a final campaign assault.

Suggested Citation

  • de Roos, Nicolas & Sarafidis, Yianis, 2018. "Momentum in dynamic contests," Economic Modelling, Elsevier, vol. 70(C), pages 401-416.
    • Handle: RePEc:eee:ecmode:v:70:y:2018:i:c:p:401-416
    DOI: 10.1016/j.econmod.2017.08.015
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    References listed on IDEAS

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    Cited by:

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    2. Ambroise Descamps & Changxia Ke & Lionel Page, 2022. "How success breeds success," Quantitative Economics, Econometric Society, vol. 13(1), pages 355-385, January.
    3. Avidit Acharya & Takuo Sugaya & Eray Turkel, 2022. "Electoral Campaigns as Dynamic Contests," "Marco Fanno" Working Papers 0293, Dipartimento di Scienze Economiche "Marco Fanno".
    4. Clark, Derek J. & Nilssen, Tore, 2020. "Creating balance in dynamic competitions," International Journal of Industrial Organization, Elsevier, vol. 69(C).

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    More about this item

    Keywords

    Momentum; Differential games; Advertising games; Political campaigns;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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