Coordinating Static and Dynamic Supply Chains with Advertising through Two-Part Tariffs

Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: Zaccour (2008) investigates the behaviour of a marketing channel where firms invest in advertising to increase brand equity, showing that an exogenous twopart tariff cannot be used to replicate the vertically integrated monopolist s performance. I revisit the same model proving the existence of a multiplicity of franchising contracts taht can do the job. In particular, I set out by illustrating an optimal two-part tariff specified as a linear function of the upstream firm s advertising effort, performing this task both in the static and in the dynamic game. then, I show that an analogous result emerges (i) in the static game by writing the fixed component of the two-part tariff as a non-linear function of the manufacturer s advertising effort; and (ii) by using a contract which is linear in the brand equity, in the dynamic case.

JEL-codes: L21 M31 M37 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
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