Dynamic Games and Applications

, Volume 7, Issue 1, pp 112–130 | Cite as

Cooperative Advertising with Accrual Rate in a Dynamic Supply Chain

  • Juan Zhang
  • Qinglong Gou
  • Susan Li
  • Zhimin Huang


We consider a supply chain in which a manufacturer stimulates his retailers investing more local advertising expenditures through a cooperative advertising program (Co-op). Co-op advertising programs usually involve two important contractual terms, a participation rate and an accrual rate. While previous literatures have discussed the participation rate excessively, they seldom study the role of the accrual rate in cooperative advertising. To investigate the impact of the accrual rate on cooperative advertising decisions, we develop a dynamic cooperative advertising model for a single manufacturer–single retailer supply chain that incorporates the participation rate and the accrual rate simultaneously. We derive the equilibrium co-op decisions of two channel members, including the manufacturer’s national advertising efforts and his participation rate, as well as the retailer’s local advertising expenditure. Our analysis of the equilibrium solutions shows that an increase in participation rate will not always increase the retailer’s advertising efforts because of the accrual rate. Also, both the manufacturer and retailer can benefit from a high accrual rate.


Co-op advertising Differential game Supply chain management Decision analysis Dynamic marketing strategies 



This work was supported by the National Natural Science Foundation of China (Grant Nos. 70901068, 71271198), the Funds for International Cooperation and Exchange of the National Natural Science Foundation of China (Grant No.71110107024), Chinese Universities Scientific Fund and Fundamental Research Funds for the Central Universities (2014B14814). Qinglong Gou would also like to acknowledge the Science Fund for Creative Research Groups of the National Natural Science Foundation of China (Grant No. 71121061) for support of his research.


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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  • Juan Zhang
    • 1
  • Qinglong Gou
    • 2
    • 3
  • Susan Li
    • 4
  • Zhimin Huang
    • 4
  1. 1.Department of Marketing, Business SchoolHohai UniversityNanjingPeople’s Republic of China
  2. 2.School of ManagementUniversity of Science and Technology of ChinaHefeiPeople’s Republic of China
  3. 3.Naveen Jindal School of ManagementThe University of Texas at DallasRichardsonUSA
  4. 4.The Robert B. Willumstad School of BusinessAdelphi UniversityGarden CityUSA

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