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On the Coordination of Static and Dynamic Marketing Channels in a Duopoly with Advertising

  • Luca LambertiniEmail author
Chapter
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 280)

Abstract

A leitmotiv of the analysis of marketing channels’ behaviour is the possibility of designing contractual relations so as to replicate the performance of vertically integrated firms, whenever this is efficient for firms. This is particularly relevant when the vertical externality provokes distortions in the firms’ incentives to invest in R&D or advertising. The present model illustrates the possibility of using two-part tariffs endogenously defined as linear functions of firms’ efforts to sterilize the vertical externality altogether in a duopoly where firms’ invest in advertising to increase brand equity. This is done first in a static model and then replicated in the differential game based upon the same building blocks.

Keywords

Supply chain Vertical relations Vertical integration Advertising 

Notes

Acknowledgements

The author would like to thank Davide Dragone, Arsen Palestini and two anonymous referees for helpful comments and suggestions. The usual disclaimer applies.

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of BolognaBolognaItaly

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