Logo
Munich Personal RePEc Archive

Welfare Analysis of Dynamic Voluntary Advertising in Covered Markets

Tenryu, Yohei and Kamei, Keita (2014): Welfare Analysis of Dynamic Voluntary Advertising in Covered Markets.

[thumbnail of MPRA_paper_60694.pdf]
Preview
PDF
MPRA_paper_60694.pdf

Download (356kB) | Preview

Abstract

In this study, we analyze a dynamic duopoly game in which firms can use advertising and price as competitive tools. The market is assumed to be completely covered in the sense that all consumers purchase a product from one of the two firms. We assume that advertising creates a positive externality. Thus, each firm voluntarily advertises to persuade consumers to buy its products over those of the other firm, even though the firms compete with one another in price. Two cases are considered: an interior case and a corner case. In this situation, we investigate how changes in consumer preference and firm technology level affect advertising, profits, and economic welfare and highlight the differences between the two cases.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.