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Cooperative dynamic advertising via state-dependent payoff weights
Paderborn University, Department of Economics and SFB 901, Paderborn, Germany |
We consider an infinite horizon cooperative advertising differential game with nontransferable utility (NTU). The values of each firm are parametrized by a common discount rate and advertising costs. First we characterize the set of efficient solutions with a constant payoff weight. We show that there does not exist a constant weight that supports an agreeable cooperative solution. Then we consider a linear state-dependent payoff weight and derive an agreeable cooperative solution for a restricted parameter space.
References:
[1] |
M. R. Caputo, Foundations of Dynamic Economic Analysis, Cambridge University Press, 2005.
doi: 10.1017/CBO9780511806827.![]() ![]() ![]() |
[2] |
E. J. Dockner, S. Jørgensen, N. V. Long and G. Sorger, Differential Games in Economics and Management Science, Cambridge University Press, 2000.
doi: 10.1017/CBO9780511805127.![]() ![]() ![]() |
[3] |
A. de-Paz, J. Marín-Solano and J. Navas,
Time-consistent equilibria in common access resource games with asymmetric players under partial cooperation, Environmental Modeling & Assessment, 18 (2013), 171-184.
doi: 10.1007/s10666-012-9339-x. |
[4] |
S. Jørgensen and G. Zaccour, Time consistency in cooperative differential games, in Decision & Control in Management Science (ed. G. Zaccour), Springer, (2002), 349–366. |
[5] |
S. Jørgensen, G. Martín-Herrán and G. Zaccour,
Agreeability and time consistency in linear-state differential games, Journal of Optimization Theory and Applications, 119 (2003), 49-63.
doi: 10.1023/B:JOTA.0000005040.78280.a6. |
[6] |
S. Jørgensen, G. Martín-Herrán and G. Zaccour,
Sustainability of cooperation over time in linear-quadratic differential games, International Game Theory Review, 7 (2005), 395-406.
doi: 10.1142/S0219198905000600. |
[7] |
V. Kaitala and M. Pohjola,
Economic development and agreeable redistribution in capitalism: Efficient game equilibria in a two-class neo-classical growth model, International Economic Review, 31 (1990), 421-438.
doi: 10.2307/2526848. |
[8] |
J. Marín-Solano, Time-consistent equilibria in a differential game model with time inconsistent preferences and partial cooperation, in Dynamic Games in Economics (eds. J. Haunschmied, V. Veliov and S. Wrzaczek), Springer, 16 (2014), 219–238.
doi: 10.1007/978-3-642-54248-0_11. |
[9] |
J. Marín-Solano,
Group inefficiency in a common property resource game with asymmetric players, Economics Letters, 136 (2015), 214-217.
doi: 10.1016/j.econlet.2015.10.002. |
[10] |
L. A. Petrosjan,
Agreeable solutions in differential games, International Journal of Mathematics, Game Theory and Algebra, 7 (1998), 165-177.
|
[11] |
L. A. Petrosyan and G. Zaccour, Cooperative differential games with transferable payoffs, in Handbook of Dynamic Game Theory (eds. T. Başar and G. Zaccour), Springer, (2018), 595–632.
doi: 10.1007/978-3-319-44374-4_12. |
[12] |
A. Prasad and S. P. Sethi,
Competitive advertising under uncertainty: A stochastic differential game approach, Journal of Optimization Theory and Applications, 123 (2004), 163-185.
doi: 10.1023/B:JOTA.0000043996.62867.20. |
[13] |
S. P. Sethi,
Deterministic and stochastic optimization of a dynamic advertising model, Optimal Control Applications and Methods, 4 (1983), 179-184.
doi: 10.1002/oca.4660040207. |
[14] |
G. Sorger,
Competitive dynamic advertising: A modification of the case game, Journal of Economic Dynamics and Control, 13 (1989), 55-80.
doi: 10.1016/0165-1889(89)90011-0. |
[15] |
G. Sorger,
Recursive Nash bargaining over a productive asset, Journal of Economic Dynamics and Control, 30 (2006), 2637-2659.
doi: 10.1016/j.jedc.2005.08.005. |
[16] |
D. W. K. Yeung and L. A. Petrosyan,
Subgame consistent solutions of a cooperative stochastic differential game with nontransferable payoffs, Journal of Optimization Theory and Applications, 124 (2005), 701-724.
doi: 10.1007/s10957-004-1181-0. |
[17] |
D. W. K. Yeung, L. A. Petrosyan and P. M. Yeung, Subgame consistent solutions for a class of cooperative stochastic differential games with nontransferable payoffs, in Advances in Dynamic Game Theory. Annals of the International Society of Dynamic Games 9 (eds. S. Jørgensen, M. Quincampoix and T. L. Vincent), Birkhäuser, (2007), 153–170.
doi: 10.1007/978-0-8176-4553-3_8. |
[18] |
D. W. K. Yeung and L. A. Petrosyan,
Subgame consistent cooperative solution for NTU dynamic games via variable weights, Automatica, 59 (2015), 84-89.
doi: 10.1016/j.automatica.2015.01.030. |
[19] |
D. W. K. Yeung and L. A. Petrosyan, Nontransferable utility cooperative dynamic games, in Handbook of Dynamic Game Theory (eds. T. Başar and G. Zaccour), Springer, (2018), 633–670. |
[20] |
G. Zaccour,
Time consistency in cooperative differential games: A tutorial, INFOR: Information Systems and Operational Research, 46 (2008), 81-92.
doi: 10.3138/infor.46.1.81. |
show all references
References:
[1] |
M. R. Caputo, Foundations of Dynamic Economic Analysis, Cambridge University Press, 2005.
doi: 10.1017/CBO9780511806827.![]() ![]() ![]() |
[2] |
E. J. Dockner, S. Jørgensen, N. V. Long and G. Sorger, Differential Games in Economics and Management Science, Cambridge University Press, 2000.
doi: 10.1017/CBO9780511805127.![]() ![]() ![]() |
[3] |
A. de-Paz, J. Marín-Solano and J. Navas,
Time-consistent equilibria in common access resource games with asymmetric players under partial cooperation, Environmental Modeling & Assessment, 18 (2013), 171-184.
doi: 10.1007/s10666-012-9339-x. |
[4] |
S. Jørgensen and G. Zaccour, Time consistency in cooperative differential games, in Decision & Control in Management Science (ed. G. Zaccour), Springer, (2002), 349–366. |
[5] |
S. Jørgensen, G. Martín-Herrán and G. Zaccour,
Agreeability and time consistency in linear-state differential games, Journal of Optimization Theory and Applications, 119 (2003), 49-63.
doi: 10.1023/B:JOTA.0000005040.78280.a6. |
[6] |
S. Jørgensen, G. Martín-Herrán and G. Zaccour,
Sustainability of cooperation over time in linear-quadratic differential games, International Game Theory Review, 7 (2005), 395-406.
doi: 10.1142/S0219198905000600. |
[7] |
V. Kaitala and M. Pohjola,
Economic development and agreeable redistribution in capitalism: Efficient game equilibria in a two-class neo-classical growth model, International Economic Review, 31 (1990), 421-438.
doi: 10.2307/2526848. |
[8] |
J. Marín-Solano, Time-consistent equilibria in a differential game model with time inconsistent preferences and partial cooperation, in Dynamic Games in Economics (eds. J. Haunschmied, V. Veliov and S. Wrzaczek), Springer, 16 (2014), 219–238.
doi: 10.1007/978-3-642-54248-0_11. |
[9] |
J. Marín-Solano,
Group inefficiency in a common property resource game with asymmetric players, Economics Letters, 136 (2015), 214-217.
doi: 10.1016/j.econlet.2015.10.002. |
[10] |
L. A. Petrosjan,
Agreeable solutions in differential games, International Journal of Mathematics, Game Theory and Algebra, 7 (1998), 165-177.
|
[11] |
L. A. Petrosyan and G. Zaccour, Cooperative differential games with transferable payoffs, in Handbook of Dynamic Game Theory (eds. T. Başar and G. Zaccour), Springer, (2018), 595–632.
doi: 10.1007/978-3-319-44374-4_12. |
[12] |
A. Prasad and S. P. Sethi,
Competitive advertising under uncertainty: A stochastic differential game approach, Journal of Optimization Theory and Applications, 123 (2004), 163-185.
doi: 10.1023/B:JOTA.0000043996.62867.20. |
[13] |
S. P. Sethi,
Deterministic and stochastic optimization of a dynamic advertising model, Optimal Control Applications and Methods, 4 (1983), 179-184.
doi: 10.1002/oca.4660040207. |
[14] |
G. Sorger,
Competitive dynamic advertising: A modification of the case game, Journal of Economic Dynamics and Control, 13 (1989), 55-80.
doi: 10.1016/0165-1889(89)90011-0. |
[15] |
G. Sorger,
Recursive Nash bargaining over a productive asset, Journal of Economic Dynamics and Control, 30 (2006), 2637-2659.
doi: 10.1016/j.jedc.2005.08.005. |
[16] |
D. W. K. Yeung and L. A. Petrosyan,
Subgame consistent solutions of a cooperative stochastic differential game with nontransferable payoffs, Journal of Optimization Theory and Applications, 124 (2005), 701-724.
doi: 10.1007/s10957-004-1181-0. |
[17] |
D. W. K. Yeung, L. A. Petrosyan and P. M. Yeung, Subgame consistent solutions for a class of cooperative stochastic differential games with nontransferable payoffs, in Advances in Dynamic Game Theory. Annals of the International Society of Dynamic Games 9 (eds. S. Jørgensen, M. Quincampoix and T. L. Vincent), Birkhäuser, (2007), 153–170.
doi: 10.1007/978-0-8176-4553-3_8. |
[18] |
D. W. K. Yeung and L. A. Petrosyan,
Subgame consistent cooperative solution for NTU dynamic games via variable weights, Automatica, 59 (2015), 84-89.
doi: 10.1016/j.automatica.2015.01.030. |
[19] |
D. W. K. Yeung and L. A. Petrosyan, Nontransferable utility cooperative dynamic games, in Handbook of Dynamic Game Theory (eds. T. Başar and G. Zaccour), Springer, (2018), 633–670. |
[20] |
G. Zaccour,
Time consistency in cooperative differential games: A tutorial, INFOR: Information Systems and Operational Research, 46 (2008), 81-92.
doi: 10.3138/infor.46.1.81. |

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