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Séminaire du GERAD

The impact of a product recall on advertising decisions while envisioning crisis or being "hazard myopic"


17 jan. 2019   11h00 — 12h00

Arka Mukherjee

Negatively publicity and goodwill erosion due to product recalls can have disastrous effects on a responsible firm. Goodwill of a firm is positively influenced by advertising. Using a linear demand function based on brand image, we study the optimal advertising strategies of firms in a duopoly environment. We find that the optimal advertisings for both the firms are dependent on the magnitude of the recall risks. A small risk positively affects the recalling firm's performance. If the firms do not foresee the recall ("hazard myopia"), under certain conditions the firm performance can be better than when they envision the crisis.

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Georges Zaccour responsable


Salle 4488
Pavillon André-Aisenstadt
Campus de l'Université de Montréal
2920, chemin de la Tour Montréal QC H3T 1J4 Canada

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