Dynamic cooperative promotion models with competing retailers and negative promotional effects on brand image

• DOI: 10.1016/j.cie.2018.02.034
• Publication Date: 2018-02-22T15:35:03Z
• Authors: Zongsheng Huang; Jiajia Nie; Jianxiong Zhang
• Keywords: 0211 other engineering and technologies; 02 engineering and technology

Abstract This paper considers the cooperative promotion in a supply chain consisting of a manufacturer and two competing retailers. In particular, the promotion efforts of retailers have a positive impact on their demands, but a negative impact on the manufacturer’s brand image. Meanwhile, we allow both myopic and far-sighted strategic behaviors of retailers. Three strategic models, i.e., two far-sighted retailers (FF), one far-sighted retailer and one myopic retailer (MF/FM) and two myopic retailers (MM), are analyzed by differential game and the feedback Stackelberg equilibrium of three models are derived via HJB equation. The finding is that the manufacturer as well as the supply chain always prefers the retailer with same strategic behaviors, despite the fact that retailers do not always stick to the same behaviors. We further extend our model into the scenario of asymmetric retailers.