Quality effects in different advertising models - An impulse control approach
In this paper, we integrate quality as a control variable in three classical dynamic optimal control models of advertising, namely, Nerlove–Arrow, Vidale–Wolfe and Ozga models. Quality refers to design quality, which may deteriorate over time. We assume that decisions in quality improvement can only be made at some exogenously given instants of time, and consequently we use the formalism of impulse optimal control to determine optimal advertising and quality investments. We report numerical results for the three models and discuss the impact of adding quality on the results.
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Volume (Year): 255 (2016)
Issue (Month): 3 ()
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- S. A. Ozga, 1960. "Imperfect Markets Through Lack of Knowledge," The Quarterly Journal of Economics, Oxford University Press, vol. 74(1), pages 29-52.
- Aust, Gerhard & Buscher, Udo, 2014. "Cooperative advertising models in supply chain management: A review," European Journal of Operational Research, Elsevier, vol. 234(1), pages 1-14.
- 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.
- El Ouardighi, Fouad & Pasin, Federico, 2006. "Quality improvement and goodwill accumulation in a dynamic duopoly," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1021-1032, December.
- Huang, Jian & Leng, Mingming & Liang, Liping, 2012. "Recent developments in dynamic advertising research," European Journal of Operational Research, Elsevier, vol. 220(3), pages 591-609.
- Nair, Anand & Narasimhan, Ram, 2006. "Dynamics of competing with quality- and advertising-based goodwill," European Journal of Operational Research, Elsevier, vol. 175(1), pages 462-474, November.
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