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Spatial Advertisement Competition: Based on Game Theory

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  • Zheng-xun Tan

Abstract

Since advertisement is an important strategy of firms to improve market share, this paper highlights duopoly advertisement under the Hotelling model. A model of advertisement under spatial duopoly is established, and corresponding effects of brand values and transportation costs are all captured. This study presents the proportion of sales revenue spending on advertisement. The condition for free-rider in advertisement investment is discussed. Under firms with the identical brand values, if firms' advertisement points to corresponding consumers, price and advertisement investment are all reduced. Therefore, advertisement is discussed under spatial competition in this work.

Suggested Citation

  • Zheng-xun Tan, 2014. "Spatial Advertisement Competition: Based on Game Theory," Journal of Applied Mathematics, Hindawi, vol. 2014, pages 1-5, March.
    • Handle: RePEc:hin:jnljam:216193
    DOI: 10.1155/2014/216193
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    Cited by:

    1. Chan Wang & Pu‐yan Nie, 2020. "Retail competition using free shopping shuttle bus strategies," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 1010-1019, September.

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