Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159271
Authors: 
Lambertini, Luca
Cellini, Roberto
Year of Publication: 
2002
Series/Report no.: 
Quaderni - Working Paper DSE 430
Abstract: 
We consider a differentiated oligopoly where firms compete a la Cournot in the market phase, and each firms may invest in advertising activity, to enlarge its market size. Each firm`s advertising effort has positive external effects on the market size of all rivals. We derive the open-loop (and the coincident closed-loop) Nash equilibrium, and the optimal behavior of a cartel involving all firms setting both quantities and advertising efforts so as to maximize joint profits. The comparative assessment of these equilibria shows that a cartel may produce a steady ste where social welfare is higher than the social welfare level associated wit the non-cooperative setting. This is due to the positive externalities from advertising activity.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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