Game Theoretic Analysis of Pricing and Vertical Cooperative Advertising of a Retailer-Duopoly with a Common Manufacturer

  • Gerhard Aust
Chapter
First Online:
Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Abstract

This paper considers competition of duopolistic retailers, who sell substitutable products supplied by a single manufacturer offering a vertical cooperative advertising program. The price-dependent component of the demand function is derived from the customers’ utility function in order to avoid logically inconsistent results. Additionally, each supply chain member can increase the costumers’ demand by advertising. By means of game theory, we get the following results: (a) Retail competition harms all players, but is beneficial to the customers. (b) Stronger competition is followed by less advertising. (c) Channel-leadership is not always advantageous to the manufacturer, and—likewise—retailers can also be better off when accepting followership.

Keywords

Supply Chain Wholesale Price Retail Price Price Decision Stackelberg Game 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Notes

Acknowledgements

A slightly modified version of this work is also published in Aust and Buscher (2014b): Game theoretic analysis of pricing and vertical cooperative advertising of a retailer-duopoly with a common manufacturer. In: Central European Journal of Operations Research. http://dx.doi.org/10.1007/s10100-014-0338-7

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Copyright information

© Springer International Publishing Switzerland 2015

Authors and Affiliations

  • Gerhard Aust
    • 1
  1. 1.Industrial ManagementTU DresdenDresdenGermany

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