Volume 04,Issue 03

Review Coordination of Advertising Policy and Its Effect on Competition Between Retailer and Manufacture in the Supply Chain

Authors

Farzaneh Asadi, Milad Abolghasemian

Abstract
The present paper aims to review the effect of cooperative promotion efforts in a two-stage supply chain and its effect on the competition between retailer and manufacturer in it. Here, the supply chain has a monopolistic manufacture and duopolistic retailers. In this chain, retailers compete with each other to invest in local advertising on the market by assuming that the investment made in local advertising is paid to the retailers by the manufacture. In addition, non-cooperative game scenarios were used based on the two principles of collusion and Cournot for retailers, according to which two Nash-Cournot and Nash-Collusion models were created. For each of the presented models, the optimal solutions of the variables and the unique equilibrium point were determined. In addition, a comparison between promotion efforts of all members of the supply chain along with the participation rate of the manufactures in advertising programs under the parameters of K and ? was investigated. The results obtained from the proposed approach indicated that the rate of participation in promotion efforts is equal for both models, K as the amount of local retailer's ads in collusion mode equals to Cournot mode, the national cost of advertising produced by the producer is equal for both models, and finally the optimal profit of the retailer is more in collateral mode than that of the Cournot state.

Keyword: Cooperative promotion efforts, Supply chain, Nash game, Local advertising, National advertising.

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