Differential game approach to pricing and advertising decisions

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

Research output: Contribution to journalArticlepeer-review

5 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 languageEnglish
Pages (from-to)688-695
Number of pages8
JournalOperations Research Letters
Volume49
Issue number5
Early online date29 Jul 2021
DOIs
Publication statusPublished - 1 Sep 2021
Externally publishedYes

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