Choosing R&D or advertising for competing firms in uncertain market
Abstract: R&D and
advertising have become important means to enhance the competitiveness of
firms’ products. Design an appropriate model to help the firm to make the right
choice is value in supply chain.
Design/methodology/approach: In considering that whether the market is
completely covered or not, we build the strategy selection model for R&D
and advertising for two competing firms and solve the optimal strategy.
Findings and Originality/value: The research results show that when a
firm does not take any measures to enhance competitiveness, another firm will
neither. However when one takes measures to improve the competitiveness,
another will do so, also. When two firms must choose one measure to improve the
competitiveness, either in full-covered market or not full-covered market, the
two firms will not choose to do advertising in step, even if the firms do not
have to pay additional cost in advertising.
Originality/value: In the game model, the firm could compare the own
profit in different strategies. According to the above model, the firm choose
the right strategy to make the profit maximize in a vertically differentiated
market. And when the firm make the choice, it must think about other primary
elements such as market.
Author: Bo Xie, Xianjia Wang
Journal Code: jptindustrigg140064