A Game Model of Competition between a New Good Producer and a Remanufacturer Using Negative Advertising

Asia-Pacific Journal of Regional Science, Vol. 1, pp. 329-336, 2017

Posted: 27 Nov 2017

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 20, 2017

Abstract

In this paper we analyze the strategic interaction between a new good producer and a remanufacturer who use negative advertising on television (TV) to compete for a greater share of the market of a particular good. Government regulations limit the total amount of negative advertising time either firm can buy. The two rival firms choose how much negative advertising time to buy simultaneously. Our analysis of this duopolistic interaction leads to four results. First, we provide the normal form representation of the game between the new good producer and the remanufacturer. Second, we specify the best response functions of the two firms. Third, we determine the pure strategy Nash equilibrium of the game under study and point out that this equilibrium is unique. Finally, we ascertain the amount of negative advertising time the two firms would buy if they could come to a binding agreement to curtail this kind of advertising.

Keywords: Duopoly, Nash Equilibrium, Negative Advertising, New Good Producer, Remanufacturer

JEL Classification: L21, M37, D21

Suggested Citation

Batabyal, Amitrajeet A. and Beladi, Hamid, A Game Model of Competition between a New Good Producer and a Remanufacturer Using Negative Advertising (November 20, 2017). Asia-Pacific Journal of Regional Science, Vol. 1, pp. 329-336, 2017, Available at SSRN: https://ssrn.com/abstract=3074694

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology ( email )

Department of Economics, RIT
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Rochester, NY NEW YORK 14623-5604
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Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics ( email )

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P.O. Box 5636
San Antonio, TX 78249
United States
210-458-7038 (Phone)
210-458-7040 (Fax)

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