# Advertising in an oligopoly with differentiated goods under general demand and cost functions: A differential game approach

## TL;DR

This paper analyzes advertising strategies in a dynamic oligopoly with differentiated goods using differential game theory, highlighting how solution types depend on strategic interactions and spillover effects.

## Contribution

It introduces a differential game framework to compare open-loop and closed-loop advertising strategies under general demand and cost functions.

## Key findings

- Open-loop and closed-loop solutions differ based on strategic substitutes or complements.
- Memoryless closed-loop and feedback solutions are equivalent without spillover effects.
- The analysis provides insights into optimal advertising in differentiated goods markets.

## Abstract

We present an analysis of advertising activities in a dynamic oligopoly with differentiated goods by differential game approach under general demand and cost functions. Mainly we show the following results. The comparison of the open-loop solution and that of the closed-loop solution depends on whether the outputs of the firms are strategic substitutes or strategic complements, and the memoryless closed-loop solution and the feedback solution are equivalent when there is no spillover effect of advertising activities.