Scholarlink

<p>We model advertising with effects on different time scales for a duopoly in imperfect substitutes using elements from Contest Theory. Firms additionally compete in a short-run strategic variable, here price or quantity, allowing simultaneous or sequential decisions, or collusion in endogenously changing stage games. Strategic variables range from ‘slow’ (advertising), over ‘moderate’ (quantities) to ‘fast’ (prices). We find feasible rewards and equilibria for the limiting average reward criterion. Uniqueness of equilibrium is not guaranteed, and we introduce two criteria which act as natural refinements. We impose stage-game rationality, i.e., the firms play optimally in each stage game. Furthermore, in establishing threats, we require that punishment is sustainable, i.e., the punisher must have nonnegative long term average own profits to avoid bankruptcy.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

Short- and long-term optimality under sustainable threats in Contest Theory models of advertising and short-run competition

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2025年1月13日

查看全文
  • Reinoud Joosten,
  • Rogier Harmelink,
  • Thom Sparrius

摘要

We model advertising with effects on different time scales for a duopoly in imperfect substitutes using elements from Contest Theory. Firms additionally compete in a short-run strategic variable, here price or quantity, allowing simultaneous or sequential decisions, or collusion in endogenously changing stage games. Strategic variables range from ‘slow’ (advertising), over ‘moderate’ (quantities) to ‘fast’ (prices). We find feasible rewards and equilibria for the limiting average reward criterion. Uniqueness of equilibrium is not guaranteed, and we introduce two criteria which act as natural refinements. We impose stage-game rationality, i.e., the firms play optimally in each stage game. Furthermore, in establishing threats, we require that punishment is sustainable, i.e., the punisher must have nonnegative long term average own profits to avoid bankruptcy.