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

Access to Document

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

Cite this

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title = "Differential game approach to pricing and advertising decisions",

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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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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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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DO - 10.1016/j.orl.2021.07.002

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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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Cite this