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A game model of competition between a new good producer and a remanufacturer using negative advertising

Author

Listed:
  • Amitrajeet A. Batabyal

    (Rochester Institute of Technology)

  • Hamid Beladi

    (University of Texas at San Antonio)

Abstract

In this paper we analyze the strategic interaction between a new good producer and a remanufacturer who use negative advertising on television (TV) to compete for a greater share of the market for a particular good. Government regulations limit the total amount of negative advertising time either firm can buy. The two rival firms choose how much negative advertising time to buy simultaneously. Our analysis of this duopolistic interaction leads to four results. First, we provide the normal form representation of the game between the new good producer and the remanufacturer. Second, we specify the best response functions of the two firms. Third, we determine the pure strategy Nash equilibrium of the game under study and point out that this equilibrium is unique. Finally, we ascertain the amount of negative advertising time the two firms would buy if they could come to a binding agreement to curtail this kind of advertising.

Suggested Citation

  • Amitrajeet A. Batabyal & Hamid Beladi, 2017. "A game model of competition between a new good producer and a remanufacturer using negative advertising," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 329-336, October.
    • Handle: RePEc:spr:apjors:v:1:y:2017:i:2:d:10.1007_s41685-017-0031-7
    DOI: 10.1007/s41685-017-0031-7
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    References listed on IDEAS

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    1. Lebreton, Baptiste & Tuma, Axel, 2006. "A quantitative approach to assessing the profitability of car and truck tire remanufacturing," International Journal of Production Economics, Elsevier, vol. 104(2), pages 639-652, December.
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    4. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
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    6. Hong, Xianpei & Xu, Lei & Du, Peng & Wang, Wenjuan, 2015. "Joint advertising, pricing and collection decisions in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 167(C), pages 12-22.
    7. Blasco, Andrea & Pin, Paolo & Sobbrio, Francesco, 2016. "Paying positive to go negative: Advertisers׳ competition and media reports," European Economic Review, Elsevier, vol. 83(C), pages 243-261.
    8. Amitrajeet A. Batabyal & Hamid Beladi, 2016. "A game model of competition for market share between a new good producer and a remanufacturer," Economics Bulletin, AccessEcon, vol. 36(2), pages 963-969.
    9. Paul H. Rubin, 2012. "Regulation of Information and Advertising," Chapters, in: Roger J. Van den Bergh & Alessio M. Pacces (ed.), Regulation and Economics, chapter 3, Edward Elgar Publishing.
    10. Shi, Lian & Sheng, Zhaohan & Xu, Feng, 2015. "The dynamics of competition in remanufacturing: A stability analysis," Economic Modelling, Elsevier, vol. 50(C), pages 245-253.
    11. Amitrajeet A. Batabyal & Hamid Beladi, 2016. "A Game Model of New and Remanufactured Goods, Brown and Green Consumers, and Market Share Dominance," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(2), pages 345-354, December.
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    Cited by:

    1. Batabyal Amitrajeet A. & Beladi Hamid, 2018. "Advertising and Competition for Market Share between a New Good Producer and a Remanufacturer," German Economic Review, De Gruyter, vol. 19(1), pages 113-118, February.

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    More about this item

    Keywords

    Duopoly; Nash equilibrium; Negative advertising; New good producer; Remanufacturer;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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