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Asymmetric Horizontal Differentiation under Advertising in a Cournot Duopoly

Brady, Malcolm orcid logoORCID: 0000-0002-4276-3976 (2022) Asymmetric Horizontal Differentiation under Advertising in a Cournot Duopoly. Games, 13 (3). ISSN 2073-4336

Abstract
Horizontal differentiation is generally derived from the aggregate utility function and is assumed to be symmetric. However, empirical work suggests that asymmetric horizontal differentiation can exist in practice. This paper examines the topic of asymmetric horizontal differentiation by allowing a firm’s costly advertising to have a different impact on its own demand function than it does on that of its rival. This leads to the interesting analytical result that advertising that increases the cross-price effect of its rival can lead to an increase in firm profits. This introduces the possibility of a ‘couple’ effect where firm advertising can tilt its own and its rival’s demand functions in different directions. Several competitive advertising ‘couple’ scenarios are explored using numerical simulation.
Metadata
Item Type:Article (Published)
Refereed:Yes
Uncontrolled Keywords:Differentiation; horizontal; asymmetry; advertising; duopoly; Cournot; simulation
Subjects:Business > Marketing
Business > Innovation
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Publisher:MDPI AG
Official URL:https://www.mdpi.com/2073-4336/13/3/37
Copyright Information:Author
ID Code:32603
Deposited On:12 May 2026 12:44 by Tam Nguyen . Last Modified 12 May 2026 12:44
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