National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel
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, retailers determine non-cooperat...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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EconJournals
2013-06-01
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| Series: | International Review of Management and Marketing |
| Subjects: | |
| Online Access: | https://dergipark.org.tr/tr/pub/irmm/issue/32075/355022?publisher=http-www-cag-edu-tr-ilhan-ozturk |
| _version_ | 1828027831152541696 |
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| author | Slim Ben Youssef Dhouha Dridi |
| author_facet | Slim Ben Youssef Dhouha Dridi |
| author_sort | Slim Ben Youssef |
| collection | DOAJ |
| description | 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, 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. Thus, when the degree of substituability between products is low, it is in the interest of retailers to set their prices non-cooperatively. 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. |
| first_indexed | 2024-04-10T13:42:05Z |
| format | Article |
| id | doaj.art-198ef295d4db46aaabdf57755bb9f018 |
| institution | Directory Open Access Journal |
| issn | 2146-4405 |
| language | English |
| last_indexed | 2024-04-10T13:42:05Z |
| publishDate | 2013-06-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Review of Management and Marketing |
| spelling | doaj.art-198ef295d4db46aaabdf57755bb9f0182023-02-15T16:11:06ZengEconJournalsInternational Review of Management and Marketing2146-44052013-06-013275851032National Advertising and Cooperation in a Manufacturer-Two-Retailers ChannelSlim Ben YoussefDhouha DridiWe 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, 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. Thus, when the degree of substituability between products is low, it is in the interest of retailers to set their prices non-cooperatively. 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.https://dergipark.org.tr/tr/pub/irmm/issue/32075/355022?publisher=http-www-cag-edu-tr-ilhan-ozturkgame theory national advertising partial-cooperation full-cooperation welfare |
| spellingShingle | Slim Ben Youssef Dhouha Dridi National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel International Review of Management and Marketing game theory national advertising partial-cooperation full-cooperation welfare |
| title | National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel |
| title_full | National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel |
| title_fullStr | National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel |
| title_full_unstemmed | National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel |
| title_short | National Advertising and Cooperation in a Manufacturer-Two-Retailers Channel |
| title_sort | national advertising and cooperation in a manufacturer two retailers channel |
| topic | game theory national advertising partial-cooperation full-cooperation welfare |
| url | https://dergipark.org.tr/tr/pub/irmm/issue/32075/355022?publisher=http-www-cag-edu-tr-ilhan-ozturk |
| work_keys_str_mv | AT slimbenyoussef nationaladvertisingandcooperationinamanufacturertworetailerschannel AT dhouhadridi nationaladvertisingandcooperationinamanufacturertworetailerschannel |