On the impact of cooperative advertising and pricing for a manufacturer-retailer supply chain

Abstract

This paper investigates the channel coordination problem of a two-level supply chain, and integrates the three streams of, as yet, rather disjointed research works: namely channel coordination; cooperative advertising mechanism; and pricing policy. Under a single-manufacturer and single-retailer channel setting, the Nash game and the cooperation game were formulated, with key assumptions related to the manufacturer and the retailer could maintain the potential market size by making marketing expenditures on some national brand names and invest in local advertising, but with diminishing returns. These models offer structural and quantitative insights into the interplay between upstream and downstream entities of the supply chain.

Keywords:

• channel coordination
• cooperative advertising
• pricing policy
• game theory

Acknowledgement

This research was partially supported by the Ministry of Science and Technology of Taiwan, under [grant number NSC 101-2622-H-251-001-CC3].