DocumentCode :
2937294
Title :
A Differential Duopoly Game with Sticky Prices, Advertising and Differentiated Goods Based on Goodwill: A Memoryless Closed-Loop Nash Equilibrium
Author :
Xiao-Jie, Wu ; Xiu-qiong, Wang ; Nuo, Liao ; Shan, Huang
Author_Institution :
Sch. of Manage., Guangdong Univ. of Technol., Guangzhou, China
Volume :
4
fYear :
2009
fDate :
26-27 Dec. 2009
Firstpage :
302
Lastpage :
307
Abstract :
This paper develops a differential duopolistic game where goods are differentiated and prices are sticky, and the competitive and informative contents of advertising are explicitly considered, allowing advertising to have market size and business-stealing effects. Compared to previous literature, the novelty of this paper rests on the fact that this paper proposes the new assumption of the price adjustment speed is decided by the goodwill levels that are composed of consumer preference structure, the levels of the product differentiation and advertising efforts, and we investigate how good differentiation, advertising and price stickiness interact in shaping the memoryless closed-loop Nash equilibrium allocation, and obtain the following three conclusions. First, the memoryless closed-loop Nash equilibrium output is increasing in product differentiation, price stickiness, and promotional efficiency. Second, the memoryless closed-loop Nash equilibrium advertising efforts are also increasing in both product differentiation and the speed of price adjustment, while the memoryless closed-loop Nash equilibrium advertising efforts is decreasing in promotional efficiency. Third, the steady state level of output is larger in the memoryless closed-loop Nash equilibrium as compared to the Cournot static equilibrium, while the steady state level of prices and advertising efforts is smaller in the memoryless closed-loop Nash equilibrium as compared to the Cournot static equilibrium.
Keywords :
advertising; differential games; pricing; promotion (marketing); Cournot static equilibrium; advertising; business-stealing effect; differential duopoly game; differentiated goods; market size; memoryless closed-loop Nash equilibrium; price adjustment speed; product differentiation; promotional efficiency; sticky prices; Advertising; Game theory; Information management; Innovation management; Investments; Nash equilibrium; Paper technology; Pricing; Solid modeling; Steady-state; advertising; differential game; differentiated goods; price stickiness;
fLanguage :
English
Publisher :
ieee
Conference_Titel :
Information Management, Innovation Management and Industrial Engineering, 2009 International Conference on
Conference_Location :
Xi´an
Print_ISBN :
978-0-7695-3876-1
Type :
conf
DOI :
10.1109/ICIII.2009.533
Filename :
5370579
Link To Document :
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