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Mathematical Problems in Engineering
Volume 2013, Article ID 260823, 8 pages
http://dx.doi.org/10.1155/2013/260823
Research Article

On Advertising Games and Spillover in Service Systems

1School of Management, Tianjin University of Technology, Tianjin 300384, China
2Business School, Nankai University, Tianjin 300071, China
3School of Electrical Engineering, Tianjin University of Technology, Tianjin 300384, China
4Business School, Tianjin University of Commerce, Tianjin 300134, China

Received 22 July 2013; Revised 18 September 2013; Accepted 6 October 2013

Academic Editor: Pui-Sze Chow

Copyright © 2013 Lei Xu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Motivated by the industry cases, we model the advertising competition between the dominant service provider and small service providers in one service market, where the dominant service provider has a major market share and the other small service providers share the remainder of market equally. Based on this setting, we discuss three advertising game models, that is, cooperative game, Boxed Pig game, and Prisoner’s game, derive the conditions for different advertising games, and characterize their equilibria. To be specific, it is found that the advertising spillover and the number of the small service providers directly determines the advertising game equilibria, while other market parameters, to some extent, can affect the results of the advertising game equilibria. According to our theoretical findings, some management insights and suggestions are given from both the academic and practical perspectives.