%0 Journal Article
%T NATIONAL ADVERTISING AND COOPERATION IN A MANUFACTURER-TWO-RETAILERS CHANNEL
%A Slim Ben Youssef
%A Dhouha Dridi
%J International Review of Management and Marketing
%D 2013
%I EconJournals
%X We consider a supply channel composed of one manufacturer and two symmetric retailers. Three cases are studied. The non-cooperation case is a leader-follower relationship. The manufacturer determines his spending in national advertising and the wholesale price. Then, retailers determine non-cooperatively the price for consumers. In the partial-cooperation case, retailers decide jointly for the price. In the full-cooperation case, all members of the channel cooperate by maximizing a joint profit function. Interestingly, partial-cooperation reduces the profits of retailers with respect to non-cooperation, when the degree of substituability between the two products proposed by retailers is low. Because of symmetry, this also implies that the total profit of retailers may decrease with partial-cooperation. Thus, when the degree of substituability between products is low, it is in the interest of retailers to set their prices non-cooperatively. We propose a cooperative implementable contract between all channel members, which shares the extra-profit due to full-cooperation. We propose a new and unusual evaluation of consumers¡¯ surplus which positively depends not only on the price-demand function but also on the spending in national advertising. Partial-cooperation is always the worst case for the manufacturer, the whole channel, consumers¡¯ surplus and social welfare, while full-cooperation is the best case.
%K Game theory
%K National advertising
%K Partial-cooperation
%K Full-cooperation
%K Welfare
%U http://www.econjournals.com/index.php/irmm/article/view/423/pdf