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Advertising in an oligopoly with differentiated goods under general demand and cost functions: A differential game approach

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  • Masahiko Hattori
  • Yasuhito Tanaka

Abstract

We present an analysis of advertising activities in a dynamic oligopoly with differentiated goods using a differential game approach under general demand and cost functions. The main conclusion is that the memoryless closed‐loop solution and the feedback solution are equivalent when there is no spillover effect of advertising activities. We also show that the comparison of the open‐loop solution and the memoryless closed‐loop solution depends on whether the firms’ outputs are strategic substitutes or strategic complements.

Suggested Citation

  • Masahiko Hattori & Yasuhito Tanaka, 2021. "Advertising in an oligopoly with differentiated goods under general demand and cost functions: A differential game approach," Manchester School, University of Manchester, vol. 89(6), pages 619-639, December.
    • Handle: RePEc:bla:manchs:v:89:y:2021:i:6:p:619-639
    DOI: 10.1111/manc.12376
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