Feedback Equilibrium for Dynamic Competitive and Cooperative Advertising

This paper not only studies the competitive advertising between the manufacturer in direct channel and the upstream retailer which is in distribution channel, but also investigates the cooperative advertising between the upstream manufacturer and the downstream retailer in distribution channel in the case that the downstream retailer faces a competition from direct channel. Through the establishment of Nash game-theoretic model between the manufacturer in direct channel and the upstream retailer which is in distribution channel, the optimal advertising decisions of distribution channel and the downstream retailer are obtained. On the other hand, in order to obtain the optimal advertising strategies of members in distribution channel, Stackelberg game-theoretic models are established in this study. In this paper, we find that when there is a manufacturer in direct channel competing with distribution channel, the advertising participation rate from the upstream manufacturer to the downstream retailer is higher than that in no competitions. Under asymmetric and symmetric competition, the profit of the upstream retailer in distribution channel is always higher than that of the manufacturer in direct channel. (C) 2019 The Authors. Published by Elsevier B.V.