Working Paper Series MK

Marketing
Dynamic Analysis of a Competitive Marketing System
Csilla Horvth, University of Groningen Peter S. H. Leeflang, University of Groningen Dick R. Wittink, Yale School of Management Working Paper # 04

This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection: http://papers.ssrn.com/abstract=285713

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Wdeoh 4= Wkh prgho0exloglqj surfhvv Vwhsv 41 Vhohfwlrq ri wkh vhw ri yduldeohv 51 Vwdwlrqdulw| lvvxhv 61 Frlqwhjudwlrq whvw 71 Gdwd wudqvirupdwlrq 81 Vhohfwlqj h{rjhqrxv yduldeohv 91 Vhohfwlqj wkh odj+v, :1 Prgho hvwlpdwlrq ;1 Gldjqrvwlf fkhfnlqj <1 Lpsxovh uhvsrqvh dqdo|vlv 431 Iruhfdvw huuru yduldqfh ghfrpsrvlwlrq Sxusrvhv Wr ghflgh zklfk yduldeohv wr lqfoxgh lqwr wkh prgho Wr ghflgh zhwkhu wr frqvlghu orqj uxq hhfwv ru qrw Wr whvw iru orqj0whup uhodwlrqvklsv ehwzhhq qrq0vwdwlrqdu| vhulhv Wr rewdlq fryduldqfh0vwdwlrqdu| vhulhv iru YDU dqdo|vlv Wr vhohfw wkh h{rjhqrxv yduldeohv iru hdfk htxdwlrq Wr ghflgh wkh wlph0krul}rq Wr hvwlpdwh wkh prgho sdudphwhuv Wr h{dplqh wkh dv|pswrwlf ehkdylru ri wkh v|vwhp Wr suhvhqw wkh g|qdplf uhdfwlrqv ri wkh v|vwhp wr xqh{shfwhg xqlw vkrfnv Wr vsolw wkh iruhfdvw huuru yduldqfh iru hdfk yduldeoh lqwr frpsrqhqwv dwwulexwhg wr hdfk ri wkh hqgrjhqrxv yduldeohv

68

Wdeoh 5= Qrq0vwdwlrqdu| whvw uhvxowv Yduldeohv odjv DGI0ydoxhv xqlw0urrwB oq+SLr ,@ 7 0615:W qr WW oq+SLr2 , 5 0;185 qr oq+SLr , 4 0<176WW qr oq+SL?r , : 051;<W qr W oq+SL?r2 , 7 051<4 qr oq+SL?r , 7 061;<WW qr WW oq+V , 6 08135 qr oq+V2 , 7 07138WW qr oq+V , 6 08163WW qr W G 7 051<4 qr G2 9 061<5WW qr W G 8 06137 qr I 8 06194WW qr I2 4 0431;7WW qr WW I 4 0431:< qr IG 4 0431<6WW qr IG2 4 0<154WW qr WW IG 5 08184 qr W Uhjuhvvlrq zlwk frqvwdqw/ zlwkrxw wuhqg/ zlwk 8( fulwlfdo ydoxh= 051;< WW Uhjuhvvlrq zlwk frqvwdqw dqg wuhqg/ zlwk 8( fulwlfdo ydoxh= 06178 @ SLr = sulfh lqgh{ zlwk vxssruw/ SL?r = sulfh lqgh{ zlwk qr vxssruw

Wdeoh 6= Rswlpdo qxpehu ri odjv iru wkh xquhvwulfwhg YDU[ prgho/ xqghu yh fulwhuld Odj OrjO OU 3 6:61< Q1 D1 4 7:715 4931< 5 87816 43814 6 9331: :813W 7 96918 7713 8 9;515 8318 9 :5916 7614 : :9718 6519 ; ;5<18 7:17 Rswlpdo odj 6 W D lqglfdwhv wkh rswlpdo qxpehu ISH DLF VF KT ;19H044 0915 0714 0816 516H044 0:18 0718W 0916 414H044 0;15 0715 0919 W ;15H045 0;19 061: 0919W <15H045 0;19 051: 0915 ;1;H045 0;1; 041< 0914 <16H045 0<13 0415 081; 415H044 0<14 0315 0818 W 413H044 0<1: 314 081: 6 ; 4 6 ri odjv lqglfdwhg e| wkh glvwlqfw fulwhuld1

69

Wdeoh 7= Wkh YDU[0ISH prgho

Suhglfwru yduldeohv oq+SLr , oq+SLr2 , oq+SLr , oq+SL?r , oq+SL?r2 , oq+SL?r , oq+V , oq+V2 , oq+V , H{rjhqrxv yduldeohv Omxqj0Er{ T Vwdwlvwlfv

Fulwhulrq yduldeohv oq+SLr , oq+SLr2 ,oq+SLr ,oq+SL?r , oq+SL?r2 , oq+SL?r , oq+V , 7 < 3 7 3 8 3 4 3 3 3 8 9 3 9 < 3 3 43 4 3 3 3 3 : 3 3 < 3 3 3 3 7 9 3 6 3 9 8 3 9 3 3 5 5 8 6 3 5 9 8 9 3 : 9 3 3 3 3 5 6 ; 3
W

oq+V2 , 3 3 3 3 3 3 3 5 3 f/ I5 461<<

oq+V , 9 3 3 6 3 5 3 3 5 f/ I6/ IG6 <186

f@ :1;7

f <1<4

f <17

f 461;9

f 4317

f 47145

f/ I4/ IG6 46185

s0 ydoxhv 3197 3178 317< 314; 3174 314: 315 314: 317; @ f = frqvwdqw whup/ G = glvsod| rqo|/ I = ihdwxuh rqo|/ I G = ihdwxuh dqg glvsod| yduldeohv

Wdeoh 8= Lpphgldwh rzq0 dqg furvv0eudqg hhfwv +ht1 44, Shufhqwdjh fkdqjh rq vdohv ri= eudqg4 eudqg5 eudqg6 W Vxssruwhg sulfh eudqg 4 :153 0315; 041::W W W Vxssruwhg sulfh eudqg 5 031;: 51;7 03189W W W Vxssruwhg sulfh eudqg 6 04137 0317; 7194W Qrq0 vxssruwhg sulfh eudqg 4 813:W 316< 04167 Qrq0 vxssruwhg sulfh eudqg 5 0416:W 5164W 314: Qrq0 vxssruwhg sulfh eudqg 6 0315: 03154 51;<W D W lqglfdwhv d vljqlfdqw sdudphwhu hvwlpdwh + @ 3=38, 4( fxw ri

6:

Wdeoh 9= Jurvv rzq0 dqg furvv0eudqg hhfwv +ht1 44, 4( fxw ri Vxssruwhg sulfh eudqg4 Vxssruwhg sulfh eudqg5 Vxssruwhg sulfh eudqg6 Qrq0vxssruwhg sulfh eudqg4 Qrq0vxssruwhg sulfh eudqg5 Qrq0vxssruwhg sulfh eudqg6 Shufhqwdjh fkdqjh rq vdohv ri= eudqg4 eudqg5 eudqg6 :1;6 3133 0413: 031<7 9185 031:5 04149 031<6 8166 916: 3133 04159 04185 8186 3133 3133 3133 91<:

Wdeoh := Qhw rzq0 dqg furvv0eudqg hhfwv zlwk ghflvlrq ixqfwlrqv +htxdwlrqv 44 dqg 45, 4( fxw ri Vxssruwhg sulfh eudqg4 Vxssruwhg sulfh eudqg5 Vxssruwhg sulfh eudqg6 Qrq0vxssruwhg sulfh eudqg4 Qrq0vxssruwhg sulfh eudqg5 Qrq0vxssruwhg sulfh eudqg6 Shufhqwdjh fkdqjh rq vdohv ri= eudqg4 eudqg5 eudqg6 ;173 3133 031;6 031:6 9185 3135 031;8 031<6 :153 ;164 3133 061:7 0419< 8186 3195 3185 3133 91<3

Wdeoh ;= Qhw rzq0 dqg furvv0eudqg hhfwv zlwk frpshwlwlyh uhvsrqvh ixqfwlrqv +htxd0 wlrqv 44 dqg 46, 4( fxw ri Vxssruwhg sulfh eudqg4 Vxssruwhg sulfh eudqg5 Vxssruwhg sulfh eudqg6 Qrq0vxssruwhg sulfh eudqg4 Qrq0vxssruwhg sulfh eudqg5 Qrq0vxssruwhg sulfh eudqg6 Shufhqwdjh fkdqjh rq vdohv ri= eudqg4 eudqg5 eudqg6 :136 3133 031<6 03184 8164 3154 04144 3133 8156 5195 3133 05173 3137 616< 31:7 3145 3133 816;

6;

Wdeoh <= IHYG uhvxowv iru qrq0vxssruwhg sulfh ri eudqg 5 ryhu wlph

shulrg 4 5 6 7 8 43 48 53 58

oq+SLr ,oq+SLr2 ,oq+SLr ,oq+SL?r , oq+SL?r2 , oq+SL?r , oq+V , 3133 3133 3133 3133 433133 3133 3133 61;5 6<1:6 3178 315; 8615; 3133 3194 7174 6<15< 3177 315; 851;9 3133 31:4 7177 6;187 31<3 315: 7<183 3137 319< 7156 691<9 4197 3158 8316< 3139 3199 61;5 741<8 4195 3165 78185 313: 318< 7154 74179 515< 3164 771;< 313: 318< 7157 74177 515< 3165 771;9 313: 318< 7158 74177 515< 3165 771;8 313: 318<

oq+V2 , 3133 41;7 5133 815: 8169 8195 819< 81:3 81:3

oq+V , 3133 3133 3133 3169 3178 317< 317< 317< 317<

Wdeoh 43= IHYG uhvxowv ri wkh hqgrjhqrxv yduldeohv ri wkh v|vwhp zlwk ghflvlrq ixqfwlrqv lq shulrg 58 +htxdwlrqv 44 dqg 45,

oq+SLr ,oq+SLr2 ,oq+SLr ,oq+SL?r , oq+SL?r2 , oq+SL?r , oq+V , oq+SLr ,<6195 31;3 4164 3135 5168 316< 3136 oq+SLr2 ,4154 <:197 3196 3135 313< 3133 3137 oq+SLr ,91<5 4139 ;<197 3185 3146 3135 413: oq+SL?r , 86166 4144 51<7 6:1;5 31:9 31<7 5148 oq+SL?r2 , 7158 74177 515< 3165 771;8 313: 318< oq+SL?r , 81;5 813; 8;178 316; 3196 591;; 31:5 oq+V , :;183 415; 4189 81;3 3189 3135 45156 oq+V2 , 3133 87154 31;5 3133 81;5 3133 3133 oq+V , :19: 5169 8417< 31<; 3148 819: 316:

oq+V2 , 4177 3169 3197 3193 81:3 417< 3136 6<148 314:

oq+V , 3136 3133 3133 3168 317< 3188 3135 3133 64146

6<

Wdeoh 44= IHYG uhvxowv ri wkh hqgrjhqrxv yduldeohv ri wkh v|vwhp zlwk frpshwlwlyh uhvsrqvh ixqfwlrqv lq shulrg 58 +htxdwlrqv 44 dqg 46,

oq+SLr ,oq+SLr2 ,oq+SLr ,oq+SL?r , oq+SL?r2 , oq+SL?r , oq+V , oq+SLr ,<413< 6158 3139 3134 51<: 414: 3135 oq+SLr2 ,418< <:1<5 3168 3134 3137 3135 3137 oq+SLr ,918< 318< <3185 317; 313: 3135 4168 oq+SL?r , 414< 3158 7164 ;718< 3187 :158 3133 oq+SL?r2 , 51<< 3138 415: 315< <61;; 316; 318: oq+SL?r , 51:: 5179 3143 3135 918< ;:1<6 3137 oq+V , :914; 317< 41:; 818: 3135 3159 48194 oq+V2 , 3133 89155 3133 3133 :13; 3133 3133 oq+V , 4318; 415; 83136 5146 4138 46163 3134

oq+V2 , 4173 3136 3168 3134 3133 3137 3133 6919< 3138

oq+V , 3135 3133 3134 41;9 3188 3137 313< 3133 5418:

73

Wdeoh 45= Prgho frpsdulvrqv

Lpphgldwh hhfwv ri 4( sulfh fxw prgho 4 G 0 K prghov zlwk frpprq odj vwuxfwxuh Sulfh 4 Sulfh 5 Sulfh 6 prgho 5 G0 K prghov xvlqj Kvldr*v surfhgxuh Sulfh 4 Sulfh 5 Sulfh 6 prgho 6 Rxu prgho zlwk rqh sulfh yduldeoh 4( fxw ri Sulfh 4 Sulfh 5 Sulfh 6 prgho 7 shufhqwdjh fkdqjh ri= rzq vdohv 61:8W 31;3W 81;4W rwkhu eudqgv* vdohv 0414;W 4138W 03175

Rzq0eudqg qhw hhfwv ri 4( sulfh fxw

8188 03158 44187

shufhqwdjh fkdqjh ri= rzq vdohv 6193W 31;:W 81<6W rwkhu eudqgv* vdohv 031<:W 31:: 031;5W 7147 03186 4614;

shufhqwdjh fkdqjh rq vdohv ri= eudqg 4 61:8W 3197W 031<;W eudqg 5 03184 31;7W 03139 eudqg 6 316: 0314; 8193W 7166 03187 45134

Rxu prgho zlwk vxssruwhg sulfh dqg qrq0vxssruwhg shufhqwdjh fkdqjh rq vdohv ri= sulfh yduldeohv 4( fxw ri eudqg4 eudqg 5 eudqg 6 W 0315; 041::W Vxssruwhg sulfh eudqg 4 :153 W W Vxssruwhg sulfh eudqg 5 031;: 51;7 03189W W W Vxssruwhg sulfh eudqg 6 04137 0317; 7194W qrq0vxssruwhg sulfh eudqg 4 813:W 316< 04167 qrq0vxssruwhg sulfh eudqg 5 0416:W 5164W 314: qrq0vxssruwhg sulfh eudqg 6 0315: 03154 51;<W D W lqglfdwhv d vljqlfdqw sdudphwhu hvwlpdwh + @ 3=38, 74

;173 9185 :153 ;164 8186 91<3

Wdeoh 46= Vwruh ohyho qhw rzq0 dqg furvv0eudqg hhfwv zlwk ghflvlrq ixqfwlrqv +dy0 hudjhg ryhu 59 vwruhv zhljkwhg e| fdwhjru| vdohv,

4 ( fxw ri Vxssruwhg sulfh eudqg 4 Vxssruwhg sulfh eudqg 5 Vxssruwhg sulfh eudqg 6 Qrq0vxssruwhg sulfh eudqg 4 Qrq0vxssruwhg sulfh eudqg 5 Qrq0vxssruwhg sulfh eudqg 6

Shufhqwdjh fkdqjh rq vdohv ri = eudqg 4 eudqg 5 eudqg 6 :1<< 316: 04155 0315; 714: 03134 03147 03136 <1<4 7197 4175 04139 031;4 5149 0313: 0414; 31<5 :18:

Iljxuh 4= Glvwulexwlrq ri qhw hhfwv ri 4( vxssruwhg sulfh fxw ri eudqg 4 rq lwv rzq vdohv +dfurvv vwruhv,

10

8 Observations 26
r s r i

6 Mean Median Maximum Minimum Std. Dev. 7.86 7.01 12.92 3.77 2.40

rrssrp

10

11

11

12

13

75

Iljxuh 5= Glvwulexwlrq ri qhw hhfwv ri 4( vxssruwhg sulfh fxw ri eudqg 5 rq lwv rzq vdohv +dfurvv vwruhv,
12

10

8
r s r i

Observations 26

Mean Median Maximum Minimum Std. Dev.

3.92 4.39 11.84 -0.70 3.27

rrssrp

-1

10

9 11 10 12 11 13 12

Iljxuh 6= Glvwulexwlrq ri qhw hhfwv ri 4( vxssruwhg sulfh fxw ri eudqg 6 rq lwv rzq vdohv +dfurvv vwruhv,

10

8 Observations 26
r s r i

6 Mean Median Maximum Minimum Std. Dev. 9.79 10.04 17.42 2.98 4.02

0
13 15 14 16 15 17 16 18 2 1 3 2 4 3 5 4 6 5 7 6 8 7 9 8 10 9 1110 1211 1312 14

rrssrp

76

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Ghnlpsh/ P1 J1 dqg Kdqvvhqv/ G1 P1 +5333,/ cWlph0vhulhv prghov lq pdunhwlqj = Sdvw/ suhvhqw dqg ixwxuh*/ Lqwhuqdwlrqdo Mrxuqdo ri Uhvhdufk lq Pdunhwlqj 4:/ 4;6~4<61 Ghnlpsh/ P1 J1/ Kdqvvhqv/ G1 P1/ Qlmv/ Y1 dqg Vwhhqndps/ M10E1 H1 P1 +5334,/ Frpshwlwlyh uhdfwlrqv= Lqwhqvlw| dqg hhfwlyhqhvv1 Sdshu suhvhqwhg dw wkh PVL Frqihuhqfh rq Frpshwlwlyh Uhvsrqvlyhqhvv/ Ervwrq1 Ghnlpsh/ P1 J1/ Kdqvvhqv/ G1 P1 dqg Vloyd0Ulvvr/ M1 P1 +4<<<,/ cOrqj0uxq hhfwv ri sulfh surprwlrqv lq vfdqqhu pdunhwv*/ Mrxuqdo ri Hfrqrphwulfv ;</ 59<~5<41 Grogdgr/ M1/ Mhwnlqvrq/ W1 dqg Vrvylood0Ulyhur/ V1 +4<<3,/ cFrlqwhjudwlrq dqg xqlw urrwv*/ Mrxuqdo ri Hfrqrplf Vxuyh|v 7/ 57<~5:61 Huhqexuj/ V1 M1 dqg Zrkdu/ P1 H1 +4<<8,/ cSxeolf dqg sulydwh lqyhvwphqw= Duh wkhuh fdxvdo olqndjhvB*/ Mrxuqdo ri Plfurhfrqrplfv 4:/ 4~631 Irhnhqv/ H1 Z1 +4<<8,/ Vfdqqhu Gdwd Edvhg Pdunhwlqj Prghoolqj= Hpslulfdo Dssol0 fdwlrqv/ SkG wkhvlv/ Xqlyhuvlw| ri Jurqlqjhq/ wkh Qhwkhuodqgv1 Irhnhqv/ H1 Z1/ Ohhdqj/ S1 V1 K1 dqg Zlwwlqn/ G1 U1 +4<<7,/ cD frpsdulvrq dqg dq h{sorudwlrq ri wkh iruhfdvwlqj dffxudf| ri d qrqolqhdu prgho dw glhuhqw ohyhov ri djjuhjdwlrq*/ Lqwhuqdwlrqdo Mrxuqdo ri Iruhfdvwlqj 43/ 578~5941 Iudqvhv/ S1 K1 +4<<;,/ Wlph Vhulhv Prghov iru Exvlqhvv dqg Hfrqrplf Iruhfdvwlqj/ Fdpeulgjh Xqlyhuvlw| Suhvv/ Fdpeulgjh1

78

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79

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