Other Applications

Abstract

The literature on differential games in marketing contains a number of studies that incorporate other decision variables than those usually seen as marketing variables, for example, production, inventories, investments, and financing. Other works study multiple marketing instruments (notably the price-advertising interaction). This chapter discusses the following topics:

• ■ Cournot games with advertising (Section 6.2). In these games, quantity-setting oligopolistic firms have additional decision variables, viz., their advertising efforts.

• ■ Pricing and advertising (Section 6.3). Although each player only has two marketing decision variables, these games are known to cause considerable analytical difficulties, at least is cases where there is a true interaction between price and advertising. The setup can be extended by investments in productive capital.

• ■ Pricing and quality (Section 6.4) where firms must decide both the product price and the design quality of their products.

• ■ Pricing and finance.(Section 6.5). The financial issue here is how internal finance, through retained earnings, limits growth and expansion of firms.

• ■ Pricing, production, capacity expansion, investments and inventories (Section 6.6).