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Marketing cooperation for differentiated products

Author

Listed:
  • Martin Peitz

    (Universidad de Alicante)

Abstract

In a three-stage duopoly game with product design at stage 1, advertising & marketing at stage 2, and price competition at stage 3, advertising & marketing enable customers to distinguish the goods from each other thus relaxing price competition. The subgame perfect equilibria of the three stage Hotelling-type model are characterized under two institutional arrangements: independant decision making at stage 2 or a joint marketing organization. The two firms will gain hum marketing cooperation implying more expenditure on advertising & marketing due to the specification of the model that both firms benefit from advertising & marketing of either firm.

Suggested Citation

  • Martin Peitz, 1996. "Marketing cooperation for differentiated products," Working Papers. Serie AD 1996-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1996-03
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1996-03.pdf
    File Function: Fisrt version / Primera version, 1996
    Download Restriction: no
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    More about this item

    Keywords

    Informative advertising; spatial competition; product differentiation; marketing cooperation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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