Vertical Cooperative Advertising Game Models between Members in Supply Chain

Abstract

AbstractThis paper considers the vertical cooperative advertising tactics in a two-echelon supply chain system, which is composed of single manufacturer and retailer. In view of the situation that market demand is influenced by the retail price and advertising investment, a non-cooperative and cooperative game models are established respectively, and a model of income distribution is given based on Shapley value. Comparing with the equilibrium of two game models, we conclude that the total revenue of the supply chain, in the case of non-cooperative game, is less than that of cooperative game, as well as in the case of cooperative game, advertising investment is higher than that of non-cooperative game.KeywordsGame modelsSupply chainShapley valueVertical cooperative advertising