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The Impact Of Advertising In A Duopoly Game

Author

Listed:
  • LAMBERT SCHOONBEEK

    (Department of Economics and Econometrics, University of Groningen, P.O. Box 800, NL-9700 AV Groningen, The Netherlands)

  • PETER KOOREMAN

    (Department of Economics, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands)

Abstract

We investigate the impact of advertising in a static differentiated duopoly. First, we consider the Nash equilibrium if firms compete with both prices and advertising. Second, we examine the Nash equilibrium if firms only compete in prices and do not advertise. We characterize the circumstances in which the profit, output, and/or price of each firm is greater (or smaller) with advertising than without advertising.

Suggested Citation

  • Lambert Schoonbeek & Peter Kooreman, 2007. "The Impact Of Advertising In A Duopoly Game," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 9(04), pages 565-581.
    • Handle: RePEc:wsi:igtrxx:v:09:y:2007:i:04:n:s0219198907001606
    DOI: 10.1142/S0219198907001606
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    Citations

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    Cited by:

    1. Philippe Askenazy & Thomas Breda & Delphine Irac, 2016. "Advertising and R&D: theory and evidence from France," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(1), pages 33-56, January.
    2. Annamaria Sorato & Bruno Viscolani, 2008. "Modelling smoothly the joint effect of several advertising media on sales in a homogeneous market," Working Papers 176, Department of Applied Mathematics, Università Ca' Foscari Venezia.
    3. Roma Paolo & Perrone Giovanni, 2010. "Generic Advertising, Brand Advertising and Price Competition: An Analysis of Free-Riding Effects and Coordination Mechanisms," Review of Marketing Science, De Gruyter, vol. 8(1), pages 1-29, October.
    4. Viscolani, Bruno, 2012. "Pure-strategy Nash equilibria in an advertising game with interference," European Journal of Operational Research, Elsevier, vol. 216(3), pages 605-612.

    More about this item

    Keywords

    Advertising; differentiated duopoly; profits; advertising ban;
    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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