Dynamic Advertising with Spillovers: Cartel vs Competitive Fringe1

1We thank George Leitmann, Georges Zaccour and two anonymous referees for helpful comments and discussion. The usual disclaimer applies. A differential oligopoly game with advertising is investigated, where different dynamics occur between two groups of agents, the former playing a compet-itive Nash game and the latter cooperating as a cartel. Sufficient conditions for stability and a qualitative analysis of the profit ratio and social welfare at equilibrium are provided. A threshold value for the size of the competitive fringe is pointed out by a suitable numerical simulation