Retail competition and cooperative advertising

Authors:
Xiuli He;Anand Krishnamoorthy;Ashutosh Prasad;Suresh P. Sethi
Affiliations:
Belk College of Business, Univerisy of North Carolina at Charlotte, NC 28223, United States;College of Business Administration, University of Central Florida, Orlando, FL 32816, United States;School of Management, University of Texas at Dallas, Richardson, TX 75080, United States;School of Management, University of Texas at Dallas, Richardson, TX 75080, United States
Venue:
Operations Research Letters
Year:
2011

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Abstract

We consider a cooperative advertising channel consisting of a manufacturer selling its product through a retailer in competition with another independent retailer. The manufacturer subsidizes its retailer's advertising only when a certain threshold is positive. Moreover, the manufacturer's support for its retailer is higher under competition than in its absence.