A dynamic Hotelling monopoly model is proposed, with the purpose of characterising the effects of informative and persuasive advertising in a regime of partial market coverage. The two models are solved to show the emergence of a unique saddle-point steady-state equilibrium in both cases. Then, equilibrium profits are compared to illustrate that the firm’s preferences on the type of advertising effort to be adopted strictly depend on initial conditions.
CITATION STYLE
Lambertini, L. (2020). Informative Versus Persuasive Advertising in a Dynamic Hotelling Monopoly. In Spatial Economics Volume I: Theory (Vol. 1, pp. 249–264). Springer International Publishing. https://doi.org/10.1007/978-3-030-40098-9_10
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