Dynamic Voluntary Advertising and Vertical Product Quality

Tenryu, Yohei and Kamei, Keita (2012): Dynamic Voluntary Advertising and Vertical Product Quality.

Abstract

We investigate the dynamic relationship between advertising and product quality under duopolistic competition. By using a simplified vertical product differentiation model with voluntary advertising, we show that the firm with larger market share has a larger advertising share and that there is a positive relationship between the difference in product quality and the number of customers in an industry.

• Item Type: MPRA Paper
• Language: English
• Keywords: Advertising, product quality, differential games, duopoly
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games

References

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