Policy Implications of an Inter-temporal Analysis of Advertising Budgeting Models

A procedure for optimizing dynamic advertising expenditures is presented in this paper, Because of the lagged effect of advertising on sales, the inter-temporal framework of optimal control theory is employed. Optimal time-paths of sales and advertising expenditures are prescribed for two well-known advertising models. Several theorems provide insights into the implications of parameter values for the time-paths. Also shown is the existence and uniqueness and the local stability of the optimal long-run stationary equilibrium for the second model with infinite horizon. PDF version: Sethi, S.P., Turner, R. E., and Neuman, C. P., "Optimal Control of Inter-Temporal Advertising Expenditures," W.P. #43-71-2, GSIA, Carnegie-Mellon University, November 1971