Strategic Interaction With Multiple Tools: A New Empirical Model

The Lanchester model of strategic interaction typically considers only two-firm rivalry and one strategic tool. This paper presents an alternative that considers rivalry among several firms using multiple tools. Marketing decisions are dynamically optimal and use equations of motion for market share that are consistent with optimal consumer choice. Using a single-market case study that consists of five years of monthly data on ready to eat cereal sales, advertising, product development investments and new product introductions, we test our model against a similar Lanchester specification. Non-nested specification tests fail to reject the proposed model, but reject the Lanchester alternative.


Subject(s):
Issue Date:
2002
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/28545
PURL Identifier:
http://purl.umn.edu/28545
Total Pages:
44
Series Statement:
Working Paper MSABR 02-8




 Record created 2017-04-01, last modified 2018-01-22

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