Equilibrium pricing and advertising strategies in a marketing channel (Q1306661)

This paper is concerned with conflict and coordination in a two-member channel of distributions. The authors propose a differential game model that includes carryover effects of advertising, expressed by a retailer-specific stock of advertising goodwill. Pricing and advertising strategies for both firms are identified under channel conflict as well as coordination. Dynamic advertising policies are designed as stationary Markov perfect strategies. In the present paper a global result is provided for the relationship between the advertising strategies of the two firms under conflict and coordination.