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

Abstract

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