Cooperative advertising in a dual channel supply chain

Abstract

The focus of this study is cooperative (co-op) advertising and the impact it has on the dual channel supply chain. We obtain equilibrium pricing and co-op advertising policies under two different competitive scenarios: Bertrand and Stackelberg equilibrium. We also compare the profit gains under these two marketing games. Based on our results, we propose the optimal strategies that system members should adopt in a dual channel competition. We also illustrate that by strategically implementing a cooperative advertising strategy under different market structures, both the system players can effectively improve their overall profits in a dual channel supply chain management.

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