Groupe d’études et de recherche en analyse des décisions


Price and advertising incentives for manufacturer Stackelberg channels

The purpose of this study is to design incentives for price and advertising coordination in a bilateral monopoly. I prove that a wholesale price reduction and a cooperative advertising program allow a decentralized channel to reach the performance of a vertically integrated one. I identify the coordinating wholesale price regions where (i) the Stackelberg manufacturer is interested in their implementation (ii) they are Pareto-improving. I then compute the optimal coordination wholesale price resulting from an egalitarian sharing of the profit surplus.

, 14 pages