Complex dynamics of the generic and brand advertising strategies in duopoly

By using the optimal profit adjusting strategies, a dynamic advertising competition model in duopoly is extended from Krishnamurthy’s static model. Both generic and brand effects for advertising are considered. This model can create complex bifurcating and chaotic behavior for the generic advertising efforts, which lead to chaotic dynamics for the brand advertising and even for the whole system. The asymptotic properties of the symmetric system and the asymmetric system are also investigated, which reflect interactions between the two firms’ advertising strategies and relationships between the brand and the generic advertising expenditures.