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The Value of Market Share and the Product Life Cycle---A Game-Theoretic Model


  • Aneel Karnani

    (Graduate School of Business Administration, University of Michigan, Ann Arbor, Michigan 48109)


The paper presents a dynamic, game-theoretic model of marketing competition in an oligopoly. The equilibrium solution to this model is used to investigate how a firm's optimal marketing expenditure per unit sold, which can be interpreted as a measure of the value of market share, depends on current and future market demand, which in turn can be related to the product life cycle. The results support and refine the conventional wisdom that the earlier it is the life cycle, the greater is the value of the market share.

Suggested Citation

  • Aneel Karnani, 1984. "The Value of Market Share and the Product Life Cycle---A Game-Theoretic Model," Management Science, INFORMS, vol. 30(6), pages 696-712, June.
  • Handle: RePEc:inm:ormnsc:v:30:y:1984:i:6:p:696-712

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    References listed on IDEAS

    1. Ian I. Mitroff, 1972. "The Myth of Objectivity OR Why Science Needs a New Psychology of Science," Management Science, INFORMS, vol. 18(10), pages 613-618, June.
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    Cited by:

    1. Bazhanov, Andrei & Levin, Yuri & Nediak, Mikhail, 2017. "Resale Price Maintenance with Strategic Customers," MPRA Paper 79467, University Library of Munich, Germany.

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    game theory/marketing: competition;


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