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Dynamic Advertising with Spillovers: Cartel vs Competitive Fringe

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  • Luca Lambertini

    ()
    (University of Bologna and The Rimini Centre for Economics Analysis, Italy.)

  • Arsen Palestini

    ()
    (University of Bologna, Italy)

Abstract

A differential oligopoly game with advertising is investigated, where different dynamics occur between two groups of agents, the former playing a competitive Nash game and the latter cooperating as a cartel. Sufficient conditions for stability and a qualitative analysis of the profit ratio and social welfare at equilibrium are provided. A threshold value for the size of the competitive fringe is pointed out by a suitable numerical simulation.

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File URL: http://www.rcfea.org/RePEc/pdf/wp48_07.pdf
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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 48-07.

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Date of creation: Jul 2007
Date of revision: Jul 2007
Handle: RePEc:rim:rimwps:48-07

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Keywords: Advertising; Differential games; Oligopoly; Collusion;

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  1. Gustav Feichtinger & Richard F. Hartl & Suresh P. Sethi, 1994. "Dynamic Optimal Control Models in Advertising: Recent Developments," Management Science, INFORMS, vol. 40(2), pages 195-226, February.
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