Ben Youssef, Slim and Dridi, Dhouha (2011): National advertising and cooperation in a manufacturer-two-retailers channel.
This is the latest version of this item.
Download (163kB) | Preview
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|
Cachon, G.P., Lariviere, M.A., 2005, Supply chain coordination with revenue-sharing contracts: strengths and limitations. Management Science 51 (1), 30-44.
Choi, S. C., 1996, Price competition in a duopoly common retailer channel. Journal of Retailing 72 (2), 117-134.
Ingene, C., Parry, M., 2004, Mathematical models of distribution channels. New York: Kluwer.
Ingene, C., Parry, M., 2007, Bilateral monopoly, identical distributors, and game-theoretic analyses of distribution channels. Journal of the Academy of Marketing Science 35, 586-602.
Karray, S., Zaccour, G., 2006, Could co-op advertising be a manufacturer's counterstrategy to store brands?. Journal of Business Research 59, 1008-1015.
Karray, S., Zaccour, G., 2007, Effectiveness of coop advertising programs in competitive distribution channels. International Game Theory Review 9 (2), 151-167.
Moorthy, S., 1987, Managing channel profits: comment. Marketing Science, 6, 375-379.
SeyedEsfahani, M. M., Biazaran, M., Gharakhani, M., 2011, A game theoretic approach to coordinate pricing and vertical co-op advertising in manufacturer-retailer supply chains. European Journal of Operational Research 211 (2), 263-273.
Taboubi, S., Zaccour, G., 2005, Coordination mechanisms in marketing channels: a survey of game theory models. GERAD Report G-2005-36.
Tsay, A., Agrawal, N., 2004, Modeling conflict and coordination in multi-channel distribution systems: a review. In: D. Simchi-Levi, D. Wu, and M. Shen (Eds.). Supply Chain Analysis in the eBusiness Era, Chapter 13. New York: Kluwer.
Wang, S-D., Zhou, Y-W., Min, J., Zhong, Y-G., 2011, Coordination of cooperative advertising models in a one-manufacturer two-retailer supply chain system. Computers & Industrial Engineering 61(4), 1053-1071.
Xiao, T., Qi, X., 2008, Price competition, cost and demand disruptions and coordination of a supply chain with one manufacturer and two competing retailers. Omega 36, 741- 753.
Xie, J., Neyret, A., 2009, Co-op advertising and pricing models in manufacturer-retailer supply chains. Computers & Industrial Engineering 56 (4), 1375-1385.
Xie, J., Wei, J.C., 2009, Coordinating advertising and pricing in a manufacturer-retailer channel. European Journal of Operational Research 197, 785-791.
Yang, S.L., Zhou, Y.W., 2006, Two-echelon supply chain models: considering duopolistic retailers' different competitive behaviors. International Journal of Production Economics 103, 104-116.
Yue, J., Austin, J., Wang, M.C., Huang, Z., 2006, Coordination of cooperative advertising in a two-level supply chain when manufacturer offers discount. European Journal of Operational Research 168, 65-85.
Available Versions of this Item
National advertising and cooperation in a manufacturer-two-retailers channel. (deposited 25. Nov 2011 20:43)
- National advertising and cooperation in a manufacturer-two-retailers channel. (deposited 16. Sep 2012 09:14) [Currently Displayed]