Abstract

This paper develops a duopolistic discounted marketing model with linear advertising costs and advertised prices for mature markets still in expansion. Generic and predatory advertising effects are combined together in the model. We characterize a class of advertising models with some lowered production costs. For such a class of models, advertising investments have a no-free-riding strict Nash equilibrium in pure strategies if discount rates are small. We discuss the entity of this efficiency at varying of parameters of our advertising model. We provide a computational framework in which market shares can be computed at equilibrium, too. We analyze market share dynamics for an asymmetrical numerical scenario where one of the two firms is more effective in generic and predatory advertising. Several numerical insights on market share dynamics are obtained. Our computational framework allows for different scenarios in practical applications and it is developed, thanks to Mathematica software.

Original languageEnglish
Article number1940007
JournalInternational Game Theory Review
Volume21
Issue number2
DOIs
Publication statusPublished - 1 Jun 2019

Scopus subject areas

  • Business and International Management
  • Computer Science(all)
  • Statistics, Probability and Uncertainty

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