Cooperative Advertising in a Dual Channel

The focus of this paper is cooperative(coop)advertising in today's electronic commerce(EC) market. The use of co-op advertising in a dual marketing channel has added a new dimension of competition. Our study provides an understanding of co-op advertising strategy in a dual channel supply chain under two different competitive types: Bertrand and Stackelberg equilibrium. We obtain both optimal Bertrand and Stackelberg equilibrium pricing and co-op advertising policies, while analyzing the strategic impact of coop advertising on the dual channel supply chain. Finally, based on our results, we propose the optimal strategies that system members should adopt in a dual channel competition.