Journal of Applied Mathematics

  • J. Appl. Math.
  • Volume 2013, Special Issue (2013), Article ID 480401, 8 pages.

Vertical Cooperative Advertising with Substitute Brands

You-Hua Chen and Xiao-Wei Wen

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Abstract

Cooperative (co-op) advertising is attracting more and more attention. This paper analyzes co-op advertising behavior based on a dual-brand model with a single manufacturer and a single retailer, and some interesting conclusions are achieved. Firstly, the firm in the supply chain advertises both brands, and the difference of advertising expenditure is not very large in equilibrium. Secondly, the retailer's advertising and the manufacturer's participation ratios depend on both the retailer's and the manufacturer's marginal profits. Thirdly, the stimulating effect increases the advertising investment while the competition effect decreases it, but they have no effect on the manufacturer's participation ratio. Fourthly, co-op advertising is more sensitive to the manufacturer's marginal profits than those of the retailer. Lastly, total advertising investment and profit are greater under cooperative decision than under Stackelberg decision.

Article information

Source
J. Appl. Math., Volume 2013, Special Issue (2013), Article ID 480401, 8 pages.

Dates
First available in Project Euclid: 14 March 2014

Permanent link to this document
https://projecteuclid.org/euclid.jam/1394807453

Digital Object Identifier
doi:10.1155/2013/480401

Mathematical Reviews number (MathSciNet)
MR3108946

Zentralblatt MATH identifier
06950698

Citation

Chen, You-Hua; Wen, Xiao-Wei. Vertical Cooperative Advertising with Substitute Brands. J. Appl. Math. 2013, Special Issue (2013), Article ID 480401, 8 pages. doi:10.1155/2013/480401. https://projecteuclid.org/euclid.jam/1394807453


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