Co-op advertising and pricing models in a manufacturer-retailer supply chain

This paper is concerned with co-op advertising strategies and equilibrium pricing in a two-member channel of distribution. Four different models are discussed which are based on three non-cooperative game (like the leader-follower game and the Nash game) and one cooperative game. We identify optimal pricing and optimal advertising strategies (with co-op advertising policies) for both firms mostly analytically but we have to resort to numerical simulation in one case. Comparisons are made about the various outcomes in every case and especially profits. This leads to consider more specifically the cooperation case in which profits are the highest for both retailer and manufacturer and how they share the extra join profit achieved by moving to cooperation.