Ben Youssef, Slim and Dridi, Dhouha (2011): National advertising and cooperation in a manufacturer-two-retailers channel.
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We consider a supply channel composed of one manufacturer and two symmetric retailers. Three cases are studied. The non-cooperation case is a leader-follower relationship. The manufacturer determines his spending in national advertising and the wholesale price. Then, the retailers determine non-cooperatively the price for consumers. In the partial-cooperation case, retailers decide jointly for the price. In the full-cooperation case, all members of the channel cooperate by maximizing a joint profit function. Interestingly, partial-cooperation reduces the profits of retailers with respect to non-cooperation, when the degree of substituability between the two products proposed by retailers is low. Because of symmetry, this also implies that the total profit of retailers may decrease with partial-cooperation. We propose a cooperative implementable contract between all channel members, which shares the extra-profit due to full-cooperation. We propose a new and unusual evaluation of consumers' surplus which positively depends not only on the price-demand function but also on the spending in national advertising. Partial-cooperation is always the worst case for the manufacturer, the whole channel, consumers' surplus and social welfare, while full-cooperation is the best case.
|Item Type:||MPRA Paper|
|Original Title:||National advertising and cooperation in a manufacturer-two-retailers channel|
|Keywords:||Game theory; National advertising; Partial-cooperation; Full-cooperation; Welfare|
|Subjects:||D - Microeconomics > D6 - Welfare Economics
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games
M - Business Administration and Business Economics; Marketing; Accounting > M3 - Marketing and Advertising > M37 - Advertising
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Slim Ben Youssef|
|Date Deposited:||16. Sep 2012 09:14|
|Last Modified:||11. Feb 2013 17:15|
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National advertising and cooperation in a manufacturer-two-retailers channel. (deposited 25. Nov 2011 20:43)
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