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Optimal advertising policy with the contagion model

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Abstract

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.

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Authors and Affiliations

  1. Faculty of Management Studies, University of Toronto, Toronto, Canada

    S. P. Sethi (Professor of Management Science)

Authors
  1. S. P. Sethi
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Additional information

Communicated by J. V. Breakwell

This work was partially supported by the National Research Council of Canada, Grant No. A4619.

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Sethi, S.P. Optimal advertising policy with the contagion model. J Optim Theory Appl 29, 615–627 (1979). https://doi.org/10.1007/BF00934454

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  • DOI: https://doi.org/10.1007/BF00934454

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