Differential game approach to pricing and advertising decisions

Hannan Amoozad Mahdiraji; Adel Hatami-Marbini; Niloofar Mohammadi Moazed; Manouchehr Ansari; Ali Asghar Abbasi Kamardi

doi:10.1016/j.orl.2021.07.002

Differential game approach to pricing and advertising decisions

Hannan Amoozad Mahdiraji^*, Adel Hatami-Marbini, Niloofar Mohammadi Moazed, Manouchehr Ansari, Ali Asghar Abbasi Kamardi

^*Corresponding author for this work

Management

Research output: Contribution to journal › Article › peer-review

4 Citations (Scopus)

Abstract

This study proposes a model to make concurrent decisions on dynamic pricing and advertising to maximise firms' profitability over an infinite time horizon in a duopoly market. To this end, the Nerlove-Arrow pricing and advertising model is designed in the presence of shifting costs in a dynamic duopolistic competition as a differential game. The Nash equilibrium solution is defined based upon a set of Hamilton–Jacobi–Bellman. Four scenarios are applied for economic interpretations and the efficacy of the model.

Original language	English
Pages (from-to)	688-695
Number of pages	8
Journal	Operations Research Letters
Volume	49
Issue number	5
Early online date	13 Jul 2021
DOIs	https://doi.org/10.1016/j.orl.2021.07.002
Publication status	Published - Sept 2021

Bibliographical note

Publisher Copyright:
© 2021 Elsevier B.V.

Keywords

Differential game
Duopoly market
Dynamic advertising
Dynamic pricing
Shift costs

ASJC Scopus subject areas

Software
Management Science and Operations Research
Industrial and Manufacturing Engineering
Applied Mathematics

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10.1016/j.orl.2021.07.002Licence: None: All rights reserved

Cite this

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abstract = "This study proposes a model to make concurrent decisions on dynamic pricing and advertising to maximise firms' profitability over an infinite time horizon in a duopoly market. To this end, the Nerlove-Arrow pricing and advertising model is designed in the presence of shifting costs in a dynamic duopolistic competition as a differential game. The Nash equilibrium solution is defined based upon a set of Hamilton–Jacobi–Bellman. Four scenarios are applied for economic interpretations and the efficacy of the model.",

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author = "{Amoozad Mahdiraji}, Hannan and Adel Hatami-Marbini and Moazed, {Niloofar Mohammadi} and Manouchehr Ansari and {Abbasi Kamardi}, {Ali Asghar}",

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AU - Amoozad Mahdiraji, Hannan

AU - Hatami-Marbini, Adel

AU - Moazed, Niloofar Mohammadi

AU - Ansari, Manouchehr

AU - Abbasi Kamardi, Ali Asghar

PY - 2021/9

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N2 - This study proposes a model to make concurrent decisions on dynamic pricing and advertising to maximise firms' profitability over an infinite time horizon in a duopoly market. To this end, the Nerlove-Arrow pricing and advertising model is designed in the presence of shifting costs in a dynamic duopolistic competition as a differential game. The Nash equilibrium solution is defined based upon a set of Hamilton–Jacobi–Bellman. Four scenarios are applied for economic interpretations and the efficacy of the model.

AB - This study proposes a model to make concurrent decisions on dynamic pricing and advertising to maximise firms' profitability over an infinite time horizon in a duopoly market. To this end, the Nerlove-Arrow pricing and advertising model is designed in the presence of shifting costs in a dynamic duopolistic competition as a differential game. The Nash equilibrium solution is defined based upon a set of Hamilton–Jacobi–Bellman. Four scenarios are applied for economic interpretations and the efficacy of the model.

KW - Differential game

KW - Duopoly market

KW - Dynamic advertising

KW - Dynamic pricing

KW - Shift costs

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VL - 49

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EP - 695

JO - Operations Research Letters

JF - Operations Research Letters

IS - 5

ER -

Differential game approach to pricing and advertising decisions

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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