Dynamics of brand competition: Effects of unobserved social networks

Abhijit Sengupta , Danica Vukadinović Greetham

Brand competition is modelled using an agent based approach in order to examine the long run dynamics of market structure and brand characteristics. A repeated game is designed where myopic firms choose strategies based on beliefs about their rivals and consumers. Consumers are heterogeneous and can observe neighbor behaviour through social networks. Although firms do not observe them, the social networks have a significant impact on the emerging market structure. Presence of networks tends to polarize market share and leads to higher volatility in brands. Yet convergence in brand characteristics usually happens whenever the market reaches a steady state. Scale-free networks accentuate the polarization and volatility more than small world or random networks. Unilateral innovations are less frequent under social networks.

Mots clés: Dynamic oligopoly; Evolutionary game; Social network

Domaines: Économie et finance quantitative [q-fin]

Abhijit Sengupta, Danica Vukadinović Greetham. Dynamics of brand competition: Effects of unobserved social networks. Journal of Economic Dynamics and Control, 2010, 34 (12), pp.2391. ⟨10.1016/j.jedc.2010.06.009⟩. ⟨hal-00743832⟩