%A Ezimadu, Peter E. %A Nwozo, Chukwuma R. %D 2018 %T Modeling Dynamic Cooperative Advertising in a Decentralized Channel %B 2018 %9 %! Modeling Dynamic Cooperative Advertising in a Decentralized Channel %K %X This work deals with cooperative advertising in a manufacturer-retailer supply channel using differential game theory. By considering the manufacturer as the Stackelberg leader and the retailer as the follower, it obtains the Stackelberg equilibrium showing the optimal strategies for both players and their resulting payoffs for both the subsidized and unsubsidized retail advertising. It shows that in a decentralized channel the provision of subsidy increases the awareness share. This implies an increase in the sum of the channel payoff, but strongly suggests that subsidy should only be provided if the rate at which the manufacturer’s payoff is increasing is twice greater than the rate at which the retailer’s payoff is increasing. It shows that an increase in a player’s margin leads to increase in his payoff, and further observes that while a fair player would increase his advertising effort as his profit margin increases, the other player reduces his margin, with the exception that when retail advertising is subsidised, the retailer tends to reduce his advertising effort for smaller increases in manufacturer’s margin, but increases it as the manufacturer’s margin gets larger. Keywords: Cooperative Advertising, Supply Chain, Sethi Model, Differential Game. %U http://yujor.fon.bg.ac.rs/index.php/yujor/article/view?path= %J Yugoslav Journal of Operations Research %0 Journal Article %& 539 %P 28 %V 28 %N 4 %@ 2334-6043 %8 2018-09-25 %7 2018-11-21