Study on Complex Advertising and Price Competition Dual-Channel Supply Chain Models Considering the Overconfidence Manufacturer

Abstract

In order to explore how the manufacturers make decisions when two manufacturers compete for local advertising investment, we examine two noncooperative models (Stackelberg and Nash game) and propose a cost sharing contract to investigate channel competition of dual-channel supply chain. The dominant power between manufacturer and retailer and the effect of channel competition strategy on price are mainly discussed. In addition, dynamic system concepts are integrated into Stackelberg game model based on bounded rational mechanism. We analyze the local stability and find that the stability level of the dual-channel supply chains depends crucially on the price adjustment speed, the level of demand uncertainty, and the risk preference. The outcome shows that, under the master-slave game model, the profits of manufacturers are greater than that under decentralized decision-making mode, and the profits of retailers under master-slave game model are less than that under decentralized decision-making mode. The profits of manufacturers and retailers in the stable region are greater than that in unstable region. Finally, the delay feedback control method is utilized and effectively controls the chaotic behavior of dual-channel supply chain model. The results have theoretical and practical significance for the game models in terms of advertising and price competition.