Impact of demand price elasticity on advantages of cooperative advertising in a two-tier supply chain

Zhao, Lei Tsinghua University Zhang, Jihua Tsinghua University Xie, Jinxing Tsinghua University

Optimization and Control mathscidoc:1611.27008

International Journal of Production Research, 54, (9), 2016
This paper focuses on pricing and vertical cooperative advertising decisions in a two-tier supply chain. Using a Stackelberg game model where the manufacturer acts as the game leader and the retailer acts as the game follower, we obtain closed-form equilibrium solution and explicitly show how pricing and advertising decisions are made. When market demand decreases exponentially with respect to the retail price and increases with respect to national and local advertising expenditures in an additive way, the manufacturer benefits from providing percentage reimbursement for the retailer’s local advertising expenditure when demand price elasticity is large enough. Whether the manufacturer benefits from cooperative advertising is also closely related to supply chain member’s relative advertising efficiency. In the decision for adopting coop advertising strategy, it is critical for the manufacturer to identify how market demand depends on national and local advertisements. The findings from this research can enhance our understanding of cooperative advertising decisions in a two-tier supply chain with price-dependent demand.
cooperative advertising, pricing, game theory, supply chain management
[ Download ] [ 2016-11-28 17:33:40 uploaded by jxie ] [ 729 downloads ] [ 0 comments ] [ Cited by 1 ]
@inproceedings{zhao,2016impact,
  title={Impact of demand price elasticity on advantages of cooperative advertising in a two-tier supply chain},
  author={Zhao, Lei, Zhang, Jihua, and Xie, Jinxing},
  url={http://archive.ymsc.tsinghua.edu.cn/pacm_paperurl/20161128173341011452666},
  booktitle={International Journal of Production Research},
  volume={54},
  number={9},
  year={2016},
}
Zhao, Lei, Zhang, Jihua, and Xie, Jinxing. Impact of demand price elasticity on advantages of cooperative advertising in a two-tier supply chain. 2016. Vol. 54. In International Journal of Production Research. http://archive.ymsc.tsinghua.edu.cn/pacm_paperurl/20161128173341011452666.
Please log in for comment!
 
 
Contact us: office-iccm@tsinghua.edu.cn | Copyright Reserved