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Author: Sheng C. Hu
Publisher:
ISBN:
Category :
Languages : en
Pages : 60
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Book Description
Author: Sheng C. Hu
Publisher:
ISBN:
Category :
Languages : en
Pages : 60
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Book Description
Author: Sheng C. Hu
Publisher:
ISBN:
Category : Advertising
Languages : en
Pages : 32
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Author: Manak Gupta
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The problem of optimal joint pricing and advertising decision making for a new product facing potential competitive entry has received inadequate attention. We propose a model that attempts to find the optimal price - advertising frontier in the face of potential competitive entry that maximizes total discounted profits for pre- and post-entry periods. We find that a firm would charge the price that equates price elasticity to marginal revenue product of advertising (as predicted by [Dorfman, R. and Steiner, P.O. (1954), Optimal Advertising and Optimal Quality, American Economic Review, 44(5), 826-836.]) only when the potential effects of pricing and advertising on its market share are not considered. Under optimal conditions, aware that market share is subject to erosion, the firm charges a somewhat lower price than the profit maximizing price, and sets an advertisement expense that is somewhat higher than the profit-maximizing advertising level as predicted by Cournot's monopolistic setting. We illustrate the applicability of our model using business product examples taken from several industries including operating systems, software, pharmaceutical, and telephone switching. Directions for future research with implications for B2B managers (for example, the possible effects of preannouncement to forestall competitive entry) are discussed.
Author: Marc Nerlove
Publisher:
ISBN:
Category : Advertising
Languages : en
Pages : 80
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Book Description
Optimal advertising and price policies are derived for the individual firm under conditions of imperfect competition. The model is simplified in the sense that it allows jump policies, which imply an infinite rate of current advertising expenditure, in the initial period. It has the advantage of considering contraction as well as expansion policies. When no factors operate to shift the demand function independently of the firm's actions, the optimal price and advertising policies are shown to be stationary after a certain point. The concept of good will, a stock related to th flow of current advertising expenditures, is introduced. Analysis of the special case in which demand is linear in logarithms and total cost is linear leads to more specific conclusions. We show that the optimal stationary solution implies a constant ratio of advertising to sales. Even in the nonstationary case, in which other factors operate to shift the demand function, the same result is obtained when these factors are assumed to change at a constant proportional rate. This result is supported by some evidence on the actual behavior of firms. (Author).
Author: Anand Krishnamoorthy
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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This paper analyzes dynamic advertising and pricing policies in a durable-good duopoly. The proposed infinite-horizon model, while general enough to capture dynamic price and advertising interactions in a competitive setting, also permits closed-form solutions. We use differential game theory to analyze two different demand specifications - linear demand and isoelastic demand - for symmetric and asymmetric competitors. We find that the optimal price is constant and does not vary with cumulative sales, while the optimal advertising is decreasing with cumulative sales. Comparative statics for the results are presented.
Author: Lola Esteban
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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This paper analyzes optimal media planning strategies in a pricing-advertising competition model where firms can use mass and specialized advertising. We find that although targeted advertising avoids the wasting of ads, firms might find it optimal to mix specialized advertising with the mass media. We also show that the characteristics of the specialized media available crucially affect the outcome of price competition between firms, which can range from a full fragmentation of the market into local monopolies to lower average prices (compared to the case where firms had only mass advertising available). Regarding welfare, we prove that although the use of specialized advertising can lower consumer surplus and drive a fragment of consumers out of the market, this advertising technology is welfare-improving, and can be Pareto superior.
Author: Yakir Plessner
Publisher:
ISBN:
Category :
Languages : en
Pages : 44
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Author: Gordon M. Phillips
Publisher: DIANE Publishing
ISBN: 9781568069142
Category : Business & Economics
Languages : en
Pages : 62
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Tests whether capital structure influences product market competition between firms that have sharply increased the debt in their capital structure.
Author: Subodha Kumar
Publisher:
ISBN:
Category :
Languages : en
Pages : 6
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The accumulated evidence indicates that pure revenue models, such as free-access models (where the revenue is solely dependent on advertisements) or pure subscription fee based models (where the revenue is solely based on subscription fees, and advertisements are not shown to customers), are not sufficient to support the survival of online information sellers. Hence, hybrid models based on a combination of subscription fees and advertising revenues have replaced the pure revenue models on many web sites including the popular online content provider sites such as Wall Street Journal and Classmates Inc. In response to increasing interest in hybrid models, we study the problem of dynamic pricing of web content on a site where revenue is generated from subscription fee as well as advertisements. Using the optimal control theory, we obtain a dynamic pricing strategy of subscription and the optimal level of advertisements shown to the subscribers. Since the decision in any one time period affects the decisions of all subsequent time periods, the proposed dynamic model provides a globally optimal solution. Our model shows that the subscription fee is reduced initially to attract more customers, and is subsequently increased once a large customer base is obtained. Even when the fee increases in later periods, the number of subscribers increases due to the value associated with the quality of the content. We present several analytical and numerical results which provide some important managerial implications.
Author:
Publisher:
ISBN:
Category : Economic research
Languages : en
Pages : 600
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