Chapter Three: Market optimization and uncertainty
Abstract
This chapter deals with optimal control and uncertainty. The part that refers to optimal control is included because the methods of optimal control theory are closely connected to differential inclusions, in particular to the problem of finding reachable sets. An application in marketing is presented.
Dynamic market optimization with respect to price, advertisement, and investment is considered. The model is non-linear. Its main parameters are the elasticities with respect to price, advertisement, and consumer income. Dynamic elements have been added to the static model. Parameters like the seasonal index and consumer income are functions of time, and the whole market grows according to ...
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