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Dynamic Advertising with Spillovers: Cartel vs Competitive Fringe

Author

Listed:
  • Luca Lambertini

    (University of Bologna and The Rimini Centre for Economics Analysis, Italy)

  • Arsen Palestini

    (University of Bologna, Italy)

Abstract

A differential oligopoly game with advertising is investigated, where different dynamics occur between two groups of agents, the former playing a competitive Nash game and the latter cooperating as a cartel. Sufficient conditions for stability and a qualitative analysis of the profit ratio and social welfare at equilibrium are provided. A threshold value for the size of the competitive fringe is pointed out by a suitable numerical simulation.

Suggested Citation

  • Luca Lambertini & Arsen Palestini, 2007. "Dynamic Advertising with Spillovers: Cartel vs Competitive Fringe," Working Paper series 48_07, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:48_07
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    File URL: http://www.rcea.org/RePEc/pdf/wp48_07.pdf
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    References listed on IDEAS

    as
    1. Gustav Feichtinger & Richard F. Hartl & Suresh P. Sethi, 1994. "Dynamic Optimal Control Models in Advertising: Recent Developments," Management Science, INFORMS, vol. 40(2), pages 195-226, February.
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    Cited by:

    1. Tenryu, Yohei & Kamei, Keita, 2014. "Welfare Analysis of Dynamic Voluntary Advertising in Covered Markets," MPRA Paper 60694, University Library of Munich, Germany.
    2. Yohei Tenryu & Keita Kamei, 2014. "Dynamic Voluntary Advertising under Partial Market Coverage," KIER Working Papers 909, Kyoto University, Institute of Economic Research.

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    More about this item

    Keywords

    Advertising; Differential games; Oligopoly; Collusion;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • 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

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