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

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

9 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	29 Jul 2021
DOIs	https://doi.org/10.1016/j.orl.2021.07.002
Publication status	Published - 1 Sept 2021
Externally published	Yes

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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.",

keywords = "Differential game, Duopoly market, Dynamic advertising, Dynamic pricing, Shift costs",

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 - 2021/9/1

Y1 - 2021/9/1

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

UR - https://www.scopus.com/pages/publications/85111281638

U2 - 10.1016/j.orl.2021.07.002

DO - 10.1016/j.orl.2021.07.002

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VL - 49

SP - 688

EP - 695

JO - Operations Research Letters

JF - Operations Research Letters

IS - 5

ER -

Differential game approach to pricing and advertising decisions

Abstract

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