Optimal Pricing and Advertising Policies for New Product Oligopoly Models. Revision PDF Download
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Author: Gerald L. Thompson
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
In this paper our previous work on monopoly and oligopoly new product models is extended by the addition of pricing as well as advertising control variables. These models contain Bass's demand growth model, and the Vidale-Wolfe and Ozga advertising models, as well as the production learning curve model and an exponential demand function. The problem of characterizing an optimal pricing and advertising policy over time is an important question in the field of marketing as well as in the areas of business policy and competitive economics. These questions are particularly important during the introductory period of a new product, when the effects of the learning curve phenomenon and market saturation are most pronounced.
Author: Gerald L. Thompson
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
In this paper our previous work on monopoly and oligopoly new product models is extended by the addition of pricing as well as advertising control variables. These models contain Bass's demand growth model, and the Vidale-Wolfe and Ozga advertising models, as well as the production learning curve model and an exponential demand function. The problem of characterizing an optimal pricing and advertising policy over time is an important question in the field of marketing as well as in the areas of business policy and competitive economics. These questions are particularly important during the introductory period of a new product, when the effects of the learning curve phenomenon and market saturation are most pronounced.
Author: Gerald Luther Thompson
Publisher:
ISBN:
Category : Advertising
Languages : en
Pages : 39
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Book Description
Author: Xavier Vives
Publisher: MIT Press (MA)
ISBN: 9780262220606
Category : Business & Economics
Languages : en
Pages : 446
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Book Description
Applies a modern game-theoretic approach to develop a theory of oligopoly pricing. The text relates classic contributions to the field of modern game theory and discusses basic game-theoretic tools and equilibrium, paying particular attention to developments in the theory of supermodular games.
Author: W. H. Brickner
Publisher:
ISBN:
Category : New products
Languages : en
Pages : 614
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Book Description
Author: Gerald L. Thompson
Publisher:
ISBN:
Category :
Languages : en
Pages : 39
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Book Description
Author: Kurt Helmes
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
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Book Description
This paper deals with deterministic dynamic pricing and advertising differential games which are stylized models of special durable-good oligopoly markets. We analyze infinite horizon models with constant price and advertising elasticities of demand in the cases of symmetric and asymmetric firms. In particular, we consider general saturation/adoption effects. These effects are modeled as transformations of the sum of the cumulative sales of all competing firms. We specify a necessary and sufficient condition such that a unique Markovian Nash-equilibrium for such games exist. For two classes of models we derive solution formulas of the optimal policies and of the value functions, and we show how to compute the evolution of the cumulative sales of each firm. The analysis of these games reveals that the existence of the Nash-equilibrium relies on the possibility to separate a component, which is specific for each firm, from a [market] component, which is the same for all firms. The common factor is a function of the decreasing untapped market size. The individual factor of each firm reflects its individual market power and has an impact on equilibrium prices; each such coefficient depends on the price elasticities, unit costs, arrival rates and discount factors of all competing companies. Formulas for these coefficients reveal how equilibrium prices depend on the number of competing firms, and how the entry or exit of a firm affects the price structure of the oligopoly.
Author: Anand Krishnamoorthy
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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Book Description
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: 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: Eunsang Yoon
Publisher:
ISBN:
Category : New products
Languages : en
Pages : 32
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Book Description
Author: Kurt Helmes
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
In Sethi et al. introduced a particular new-product adoption model. They determine optimal advertising and pricing policies of an associated deterministic infinite horizon discounted control problem. Their analysis is based on the fact that the corresponding Hamilton-Jacobi-Bellman (HJB) equation is an ordinary nonlinear differential equation which has an analytical solution. In this paper, generalizations of their model are considered. We take arbitrary adoption and saturation effects into account, and solve finite and infinite horizon discounted variations of associated control problems. If the horizon is finite, the HJB-equation is a 1st order nonlinear partial differential equation with specific boundary conditions. For a fairly general class of models we show that these partial differential equations have analytical Solutions. Explicit formulas of the value function and the optimal policies are derived. The controlled Bass model with isoelastic demand is a special example of the class of controlled adoption models to be examined and will be analyzed in some detail.
