Coordinating static and dynamic supply chains with advertising through two-part tariffs. (English) Zbl 1364.91093
Summary: G. Zaccour [ibid. 44, No. 5, 1233–1239 (2008; Zbl 1283.91083)] analyses a marketing channel where firms invest in advertising to increase brand equity, showing that an exogenous two-part tariff cannot replicate the vertically integrated performance. I revisit the model proving that a multiplicity of efficient franchising contracts exists. I characterize an optimal two-part tariff specified as a linear function of the upstream firm’s advertising effort, performing this task both in the static and in the dynamic games. An analogous result emerges both in the static game, writing the fixed component of the two-part tariff as a nonlinear function of the manufacturer’s advertising effort, and in the dynamic game, using a contract which is linear in the brand equity.
MSC:
| 91B60 | Trade models |
| 90B60 | Marketing, advertising |
| 91A23 | Differential games (aspects of game theory) |
Citations:
Zbl 1283.91083References:
| [1] | Bergen, M.; John, G., Understanding cooperative advertising participation rates in conventional channels, Journal of Marketing Research, 34, 357-369 (1997) |
| [2] | Cachon, G. P., Supply chain coordination with contracts, (Graves, S.; de Kok, T., Handbook in Operation Research and Management Science: Supply Chain Management (2003), North-Holland: North-Holland Amsterdam) · Zbl 1101.90311 |
| [3] | Dragone, D.; Lambertini, L.; Palestini, A., Static and dynamic best-response potential functions for the non-linear Cournot game, Optimization, 61, 1283-1293 (2012) · Zbl 1259.91029 |
| [4] | Gerstner, E.; Hess, J. D., Pull promotions and channel coordination, Marketing Science, 14, 43-60 (1995) |
| [5] | Grout, P., Investment and wages in the absence of binding contracts: a Nash bargaining approach, Econometrica, 52, 449-460 (1984) |
| [6] | Ingene, C. A.; Parry, M. E., Channel coordination when retailers compete, Marketing Science, 14, 360-377 (1995) |
| [7] | Ingene, C. A.; Parry, M. E., Mathematical models of distribution channels (2004), Kluwer: Kluwer Boston, MA |
| [8] | Ingene, C. A.; Taboubi, S.; Zaccour, G., Game-theoretic coordination mechanisms in distribution channels: integration and extensions for models without competition, Journal of Retailing, 88, 476-496 (2012) |
| [9] | Jeuland, A. P.; Shugan, S. M., Managing channel profits, Marketing Science, 2, 239-272 (1983) |
| [10] | Jeuland, A. P.; Shugan, S. M., Reply to: managing channel profits: comment, Marketing Science, 7, 103-106 (1988) |
| [11] | Jeuland, A. P.; Shugan, S. M., Channel of distribution profits when channel members form conjectures, Marketing Science, 7, 202-210 (1988) |
| [12] | Klein, B.; Crawford, R.; Alchian, A., Vertical integration, appropriable rents, and the competitive contracting process, Journal of Law and Economics, 21, 297-326 (1978) |
| [13] | Lambertini, L., Coordinating static and dynamic supply chains with advertising through two-part tariffs, WP 874, DSE (2013), University of Bologna |
| [14] | McGuire, T.; Staelin, R., An industry equilibrium analysis of downstream vertical integration, Marketing Science, 2, 161-192 (1983) |
| [15] | Monderer, D.; Shapley, L. S., Potential games, Games and Economic Behavior, 14, 124-143 (1996) · Zbl 0862.90137 |
| [16] | Moorthy, K. S., Managing channel profits: comment, Marketing Science, 6, 375-379 (1987) |
| [17] | Simaan, M.; Takayama, T., Game theory applied to dynamic duopoly problems with production constraints, Automatica, 14, 161-166 (1978) · Zbl 0376.90098 |
| [18] | Spengler, J., Vertical integration and antitrust policy, Journal of Political Economy, 58, 347-352 (1950) |
| [19] | Williamson, O. E., The vertical integration of production: market failure considerations, American Economic Review, 61, 112-123 (1971) |
| [20] | Zaccour, G., On the coordination of dynamic marketing channels and two-part tariffs, Automatica, 44, 1233-1239 (2008) · Zbl 1283.91083 |
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.
