@article{Wang:201535,
      recid = {201535},
      author = {Wang, Shinn-Shyr and Stiegert, Kyle W.},
      title = {The Duopolistic Firm with Endogenous Risk Control Case of  Persuasive Advertising and Product Differentiation},
      address = {2006-02},
      number = {1803-2016-142477},
      series = {FSWP},
      pages = {43},
      year = {2006},
      abstract = {In this paper, a two-period game is constructed, where  duopoly firms choose advertising
strategies in the first  period and compete in price or quantity in the second  period by maximizing
the value of firm equity. Using  certainty equivalence, we demonstrate the impacts of  uncertainty
and modes of competition on duopoly firms'  optimal pricing, production, and advertising
strategies.  Equilibrium price and quantity outcomes emerge as  significantly different from the
standard industrial  organization model of profit maximization. It turns out  that the common
measurement of market power, the Lerner  index, is generally mis-stated. In contrast to  the
literature, we also find that firms will optimally  switch from quantity to price competition either
when  advertising costs are low, demand is high, or if  idiosyncratic risk is reduced. A series of
simulations  confirm these findings.},
      url = {http://ageconsearch.umn.edu/record/201535},
      doi = {https://doi.org/10.22004/ag.econ.201535},
}