Abstract
We consider a noncooperative differential game where a retailer sells her own private label in addition to the manufacturer’s brand. We assume that each brand’s goodwill evolves according to a modified Nerlove-Arrow dynamics, in such a way that the advertising effort of one brand hurts the competitor’s goodwill stock. We characterize Feedback-Stackelberg pricing and advertising strategies and employ simulations to analyze their sensitivity to the main model parameters.
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We thank an anonymous Reviewer for very helpful comments. Research supported by NSERC, Canada, and FQRSC, Quebec. Research completed when the second author was a visiting professor at GERAD, HEC Montréal. The second author’s research was partially supported by MEC and JCYL under projects SEJ2005-03858/ECON and VA045A06, co-financed by FEDER funds.
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Amrouche, N., Martín-Herrán, G. & Zaccour, G. Feedback Stackelberg equilibrium strategies when the private label competes with the national brand. Ann Oper Res 164, 79–95 (2008). https://doi.org/10.1007/s10479-008-0320-7
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DOI: https://doi.org/10.1007/s10479-008-0320-7