Advertising in an oligopoly with differentiated goods under general demand and cost functions: A differential game approach

Masahiko Hattori, Yasuhito Tanaka

We present an analysis of advertising activities in a dynamic oligopoly with differentiated goods by differential game approach under general demand and cost functions. Mainly we show the following results. The comparison of the open-loop solution and that of the closed-loop solution depends on whether the outputs of the firms are strategic substitutes or strategic complements, and the memoryless closed-loop solution and the feedback solution are equivalent when there is no spillover effect of advertising activities.

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