Coordination of advertising strategies in a fashion licensing contract (Q1035893)

The paper characterizes cooperative and non-cooperative advertising strategies of a licensor and licensee involved in a licensing contract in the fashion business. Licensing is the process of leasing a legally protected entity (brand, name, logo, etc.) in conjunction with a product or product line. It consists in a contractual agreement between two business entities: the owner of the property, called licensor; and the renter of the rights, called licensee. It is shown that if the licensor, who acts as the leader, uses an incentive strategy that depends on the licensee advertising, then it can reach the jointly optimal solution in a decentralized way.