Expanded Hotelling Model with Introduction of Informative Advertising

摘要

Traditional Hotelling Model is theoretically based on several assumptions, which implicitly include customers' general awareness of the two firms on both prices and productions. However, there has been much interests in studying Hotelling Model with relaxing its basic assumptions. In this paper, we introduce informative advertisement into Hotelling Model, which might be more consistent with real-world situation. And then we conclude the inherent relationship between price and advertising, depending on a series of analysis.