Optimal advertising policy with the contagion model
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This paper considers an optimal control problem for the dynamics of a contagion model, the optimal control being the rate of advertising expenditure that maximizes the present value of net profit streams over an infinite horizon. By using a Green's theorem approach, it is shown that there are multiple optimal stationary equilibria and that the optimal path from any given initial condition is a nearest feasible path to one of these equilibria.
Key WordsOptimal control advertising Green's theorem approach nearest feasible path infinite horizon optimal stationary equilibria economic application
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