, Volume 139, Issue 2, pp 351-360

Optimal Advertising and Pricing in a New-Product Adoption Model

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Abstract

A model of new-product adoption is proposed that incorporates price and advertising effects. An optimal control problem that uses the model as its dynamics is solved explicitly to obtain the optimal price and advertising effort over time. The model has a great potential to be used in obtaining solutions and insights in a variety of differential game settings.

Communicated by G. Leitmann.
The authors thank Anshuman Chutani for help with the figures.