Coordination of pricing and co-op advertising models in supply chain: A game theoretic approach

Co-op advertising is an interactive relationship between manufacturer and retailer(s) supply chain and makes up the majority of marketing budget in many product lines for manufacturers and retailers. This paper considers pricing and co-op advertising decisions in two-stage supply chain and develops a monopolistic retailer and duopolistic retailerʹs model. In these models, the manufacturer and the retailers play the Nash, Manufacturer-Stackelberg and cooperative game to make optimal pricing and co-op advertising decisions. A bargaining model is utilized for determine the best pricing and co-op advertising scheme for achieving full coordination in the supply chain.