It has been established that trade credit can be influenced by a lot of factors. However, no specific function has been used to neither represent these factors nor consider their effects. This paper considers a supplier-retailer Stackelberg game in which the supplier as the channel leader supplies credit goods to the retailer who in-turn sells to the consumers. It uses a credit function based on credit period, supplier’s price margin and product promotion effort to model the players’ payoffs. The work considers two game scenarios: a situation involving the provision of trade credit and a situation without trade credit. The work obtains a closed-form solution for the credit period for the credit provision scenario, and the promotion efforts and payoffs for both scenarios, and shows that credit period prolongation may not be in favour of the retailer, and that the retailer can attain a larger payoff than the supplier. It also shows that the retailer’s margin is very crucial for both channel scenarios, and observes that the players are better-off with trade credit.

Two-party channel setting has been a choice study-setting for trade credit. This work considers a three-member channel setting using Stackelberg game theory. The study considers the manufacturer as the channel leader, with the distributor as the first follower, and the retailer as the last follower. The manufacturer gives credit goods to the distributor, who similarly gives credit goods to the retailer. The retailer engages in the promotion of the product. Using a promotion effort, price margins and credit periods dependent credit functions, the work examines three game-theoretic models on the manufacturer, the distributor and the retailer’s payoffs. The work uses backward induction to determine the promotion effort, the credit period and the payoffs. It observes that the margins are motivational enough to drive product promotion which reduces with credit period so that in the long-run the promotion effort stabilizes. The work further observes that the distributor’s involvement is very crucial to the payoffs.

Game-theoretic trade credit models are quite scarce, especially in relation to product promotion. This work examined a trade credit supply chain involving a manufacturer and two retailers in a decentralised supply chain in which the retailers engage in product promotion while the manufacturer financed them through credit provision. It considered a supply chain structure in which the manufacturer provides trade credit to the retailers and a situation in which he does not provide trade credit. It used Stackelberg game theory to determine the optimal promotion efforts, the credit periods and the players’ payoffs, and showed that while the manufacturer is better-off with the retailers’ efforts, the retailers need to consciously determine appropriate optimal effort to avoid getting short-changed. It also showed that while credit period reduces with the manufacturer’s margin, it increases with a retailer’s margin. It further showed that while the retailers’ payoffs reduce continuously with credit period, the manufacturer’s payoff is fixed in the long-run irrespective of the credit period provided by the manufacturer to the retailers. By comparison the players as well as the channel perform better with the adoption of trade credit, however a retailer must avoid placing he price margin at equality with that of the manufacturer if he hopes to enjoy long credit period.

The formulation and incorporation of credit function into trade credit models is a much recent development. In addition extension of this innovation to the end-user has not been achieved. This work models trade credit interaction extension from a manufacturer to a consumer through the retailer. It considers a Stackelberg game-theoretic model setting in which the manufacturer provides channel trade credit through the retailer to the end-user, while the retailer engages in promotion of the product. The paper uses backward induction to obtain the Stackelberg equilibrium for the promotion effort, the retailer’s credit period and the manufacturer’s credit period. It also obtains the long-run Stackelberg equilibria for the decision variables. The paper shows that the retailer is more liberal with allowable credit period than the manufacturer. In general, the players are credit period-liberal with retail margin, and ungenerous with credit period with manufacturer’s margin. It further shows that the manufacturer’s credit period increases more rapidly than the retailer’s credit period with retailer’s margin. On the other hand the manufacturer’s credit period decreases more rapidly than the retailer’s credit period with the manufacturer’s margin.