Group for Research in Decision Analysis


Feedback Stackelberg Equilibrium Strategies when the Private Label Competes with the National Brand

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We consider a noncooperative differential game where a retailer sells her own private label in addition to the manufacturer’s brand. We assume that each brand’s goodwill evolves according to a modified Nerlove-Arrow dynamic, in such a way that the advertising effort of one brand hurts the competitor’s goodwill stock. We characterize Feedback-Stackelberg pricing and advertising strategies and employ simulations to analyze their sensitivity to the main model parameters.

, 24 pages