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Dynamic Voluntary Advertising and Vertical Product Quality

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  • Tenryu, Yohei
  • Kamei, Keita

Abstract

We investigate the dynamic relationship between advertising and product quality under duopolistic competition. By using a simplified vertical product differentiation model with voluntary advertising, we show that the firm with larger market share has a larger advertising share and that there is a positive relationship between the difference in product quality and the number of customers in an industry.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 44062.

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Date of creation: 01 Dec 2012
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Handle: RePEc:pra:mprapa:44062

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Keywords: Advertising; product quality; differential games; duopoly;

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  1. Claudio A. Piga, 1998. "A Dynamic Model of Advertising and Product Differentiation," Review of Industrial Organization, Springer, Springer, vol. 13(5), pages 509-522, October.
  2. Roberts, M.J. & Samuelson, L., 1988. "An Empirical Analysis Of Dynamic, Non-Price Competition In An Oligopolistic Industry," Papers, Pennsylvania State - Department of Economics 3-88-14, Pennsylvania State - Department of Economics.
  3. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521637329.
  4. Huang, Jian & Leng, Mingming & Liang, Liping, 2012. "Recent developments in dynamic advertising research," European Journal of Operational Research, Elsevier, Elsevier, vol. 220(3), pages 591-609.
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