Game Analysis of the Supply Chain Co-op Advertising Based on the Advertising Efforts and Price Discount

Abstract

The focus of this paper is supply chain co-op advertising based on advertising efforts and price discount. Through comparing three non-cooperative games: M-R Stackelberg, R-M Stackelberg and Nash equilibrium model, our study provides an understanding of co-op advertising efforts strategy. We obtain optimal equilibrium for both co-op advertising strategies and manufacturer's price discount policies while analyzing the strategic impact of co-op advertising. Finally the results show that both the manufacturer and retailer would like to choose Stackelberg rather than Nash equilibrium to maximize their profits. Besides, we also find that under M-R Srackelberg game, there is a negative correlation between the manufacturer's participation rate and the marginal profits of both the manufacturer and the retailer, which is different from the previous conclusion.