A Stackelberg Game of Innovation Diffusion: Pricing, Advertising and Subsidy Strategies
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We consider a firm that wishes to maximise the profits coming from the sale of a new product or technology by determining an optimal price and advertising strategy. A public authority wishes to accelerate and stimulate the adoption of the new product by using a budget to give price subsidies directly to the consumers. The problem is set up as a Stackelberg differential game.
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