Stochastic Dynamic Market Share Attraction Games

Abstract A dynamic oligopoly model, having a market share attraction form, is formulated as a stochastic sequential game. Market shares evolve randomly over time according to dynamics that incorporate a general lag structure. The model incorporates "goodwill" as a measure of current and past effort decisions. Qualitative properties of closed-loop, equilibrium strategies are developed by establishing a relationship between an equilibrium point of the dynamic, stochastic game and an associated static (one-period) game. Journal of Economic Literature Classification Number: C73.