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Vertical Cooperative Advertising with Substitute Brands: Brief Overview | Chapter 6 | Recent Studies in Mathematics and Computer Science Vol. 1

Cooperative (co-op) advertising is attracting more and more attention. This paper analyzes co-op advertising behavior based on a dual brands model with a single manufacturer and a single retailer and some interesting conclusions are achieved. Firstly, firm in the supply chain advertises both brands and the difference of advertising expenditure is not very large in equilibrium. Secondly, the retailer’s advertising and the manufacturer’s participation ratio depend on both the retailer’s and the manufacturer’s marginal profits. Thirdly, stimulating effect increases advertising investment while competition effect decreases it, but they have no effect on the manufacturer’s participation ratio. Fourthly, co-op advertising is more sensitive to the manufacturer’s marginal profits than that of the retailer. Lastly, total advertising investment and profit are greater under cooperative decision than under Stackelberg decision

Author(s) Details

You-Hua Chen
 College of Economics and Management, South China Agricultural University, Guangzhou, 510642, P. R. China.

Xiao-Wei Wen
College of Economics and Management, South China Agricultural University, Guangzhou, 510642, P. R. China.

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