A lanchester-type dynamic game of advertising and pricing

Steffen Jørgensen, Simon Sigué

    Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

    4 Citations (Scopus)

    Abstract

    The paper studies a differential game played by two competing firms over a finite time horizon. As the game progresses, the firms observe the position of the game, i.e., the current time and the current market shares. Each firm uses pricing and advertising in order to influence market shares. We suggest a generalization of the Lanchester market share dynamics such that the rates at which firms attract market share from each other are determined not only by their advertising efforts but also by the consumer prices charged in the market. A full characterization of Nash equilibrium price and advertising strategies is obtained.

    Original languageEnglish
    Title of host publicationInternational Series in Operations Research and Management Science
    Pages1-14
    Number of pages14
    DOIs
    Publication statusPublished - 2020

    Publication series

    NameInternational Series in Operations Research and Management Science
    Volume280
    ISSN (Print)0884-8289
    ISSN (Electronic)2214-7934

    Keywords

    • Differential game
    • Duopoly
    • Markovian Nash equilibrium
    • Price and advertising competition

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