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A Unifying Differential Game Of Advertising And Promotions

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  • HASSAN BENCHEKROUN

    (Department of Economics, CIREQ, McGill University, 855 Sherbrooke West, Montreal, QC, Canada, H3A-2T7, Canada)

Abstract

The literature on advertising and promotions can be divided in two categories. A first group of models assume that promotion contributes (positively) to the goodwill towards the product, and a second group assumes that promotions reduce that goodwill. In this paper we build a differential game model where the impact of promotion on goodwill is endogenously determined. We conduct a comparative dynamics exercise. An unexpected result is that an increase in the sensitivity of sales to goodwill can lead to a decrease of the equilibrium level of sales.

Suggested Citation

  • Hassan Benchekroun, 2007. "A Unifying Differential Game Of Advertising And Promotions," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 9(02), pages 183-197.
    • Handle: RePEc:wsi:igtrxx:v:09:y:2007:i:02:n:s0219198907001357
    DOI: 10.1142/S0219198907001357
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    Cited by:

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    More about this item

    Keywords

    Marketing; advertising and promotion; differential games; marketing channel;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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