We revisit the relationship between market power and firms’ investment incentives in a noncooperative differential oligopoly game where firms sell differentiated goods and invest in advertising to increase the brand equity of their respective goods. The feedback equilibrium obtains under open-loop rules, and aggregate expenditure on goodwill takes an inverted-U shape under both Cournot and Bertrand behaviour, provided product differentiation is sufficiently high. Total industry expenditure is higher under Cournot competition.

Inverted-U Aggregate Investment Curves in a Dynamic Game of Advertising / Lambertini, L.; Zaccour, G.. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - STAMPA. - 132:(2015), pp. 34-38.

Inverted-U Aggregate Investment Curves in a Dynamic Game of Advertising

LAMBERTINI, LUCA;
2015

Abstract

We revisit the relationship between market power and firms’ investment incentives in a noncooperative differential oligopoly game where firms sell differentiated goods and invest in advertising to increase the brand equity of their respective goods. The feedback equilibrium obtains under open-loop rules, and aggregate expenditure on goodwill takes an inverted-U shape under both Cournot and Bertrand behaviour, provided product differentiation is sufficiently high. Total industry expenditure is higher under Cournot competition.
2015
Inverted-U Aggregate Investment Curves in a Dynamic Game of Advertising / Lambertini, L.; Zaccour, G.. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - STAMPA. - 132:(2015), pp. 34-38.
Lambertini, L.; Zaccour, G.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/549832
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