Research on the dynamic advertising strategies of the duopoly manufacturers—the application of advertising differential game model

Abstract

In tradition the duopoly manufacturer theories, which all assumed that the time was static, deduced the solutions of Cournot-Nash, Leader-Follower or Collusion under the consideration of the reaction function. But in reality, the time should be dynamic, and the targets of different decision-makers maybe conflict with or depend on each other. So, not only should the decision-makers foresee the strategies of the other decision-makers before hand, more over they should also consider the effect that their own strategies have on the strategies of the other decision-makers in the future. And in this paper this argument is used to build up the dynamic game model to research on the dynamic advertising strategies of the duopoly manufacturers. We deduce the non-cooperative Nash equilibrium of the open-loop and feedback strategies, then after through the analysis of the equilibrium solution, we obtain 5 propositions to provide theoretic basis for the duopoly manufacturers to make advertising strategies in the planning period.