Article

Journal of Optimization Theory and Applications

, 139:351

First online:

Optimal Advertising and Pricing in a New-Product Adoption Model

  • S. P. SethiAffiliated withSchool of Management, University of Texas at Dallas Email author 
  • , A. PrasadAffiliated withSchool of Management, University of Texas at Dallas
  • , X. HeAffiliated withBelk College of Business, University of North Carolina at Charlotte

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access

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.

Keywords

Durable goods sales Advertising Pricing Optimal control Dynamic programming