Some types of competition fall into what is termed "non-price competition." Advertising is an significant form of non-price competition.

   Suppose two firms repeat the game shown to the right. In this version Advertising is a dominant strategy in the one-time game, but we might expect, if these were the payoffs, that the firms could come to a cooperative agreement over time to refrain from advertising. Since casual observation suggests that advertising is a major expenditure for most firms either this is the wrong payoff matrix, or its difficult to maintain a no-advertising cooperative agreement.

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