Optimal Advertising and Pricing in a Dynamic Durable Goods Supply Chain

Chutani, Anshuman; Sethi, Suresh P.

doi:10.1007/s10957-012-0034-5

Cited by 60 publications

(34 citation statements)

References 28 publications

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“…On the other hand, the framework of stochastic Stackelberg differential games has found extensive applications in supply chain management. For instance, one may refer to He et al (2009), Chutani and Sethi (2012) and Øksendal et al (2013). Owing to the leadership and followership roles played by reinsurers and insurers, the stochastic Stackelberg differential game would be an ideal framework to model the activity of transferring insurance risk through reinsurance contracts.…”

Section: Introductionmentioning

confidence: 99%

On a New Paradigm of Optimal Reinsurance: A Stochastic Stackelberg Differential Game Between an Insurer and a Reinsurer

Shen

2018

ASTIN Bull.

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This paper proposes a new continuous-time framework to analyze optimal reinsurance, in which an insurer and a reinsurer are two players of a stochastic Stackelberg differential game, i.e., a stochastic leader-follower differential game. This allows us to determine optimal reinsurance from joint interests of the insurer and the reinsurer, which is rarely considered in the continuous-time setting. In the Stackelberg game, the reinsurer moves first and the insurer does subsequently to achieve a Stackelberg equilibrium toward optimal reinsurance arrangement. Speaking more precisely, the reinsurer is the leader of the game and decides on an optimal reinsurance premium to charge, while the insurer is the follower of the game and chooses an optimal proportional reinsurance to purchase. Under utility maximization criteria, we study the game problem starting from the general setting with generic utilities and random coefficients to the special case with exponential utilities and constant coefficients. In the special case, we find that the reinsurer applies the variance premium principle to calculate the optimal reinsurance premium and the insurer's optimal ceding/retained proportion of insurance risk depends not only on the risk aversion of itself but also on that of the reinsurer.

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Section: Introductionmentioning

confidence: 99%

On a New Paradigm of Optimal Reinsurance: A Stochastic Stackelberg Differential Game Between an Insurer and a Reinsurer

Shen

2018

ASTIN Bull.

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“…They showed that higher profits can be achieved following the implementation of cooperative advertising programs along with a two-part tariff in a channel with a single manufacturer and multiple retailers. Chutani and Sethi (2012) also solved a cooperative advertising model with two retailers. They used a dynamic model that considers prices, retail advertising and coop advertising rates as decision variables, but ignores price competition between retailers.…”

Section: Introductionmentioning

confidence: 99%

Cooperative advertising in a supply chain with retail competition

Karray

Amin

2014

International Journal of Production Research

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This research assesses the effects of cooperative (coop) advertising in a channel with competing retailers considering both advertising and pricing as decision variables. We develop a game-theoretic model and provide equilibrium solutions for two games. In Game 1, the manufacturer and the retailers do not use cooperative advertising (status quo); and in Game 2, coop advertising is implemented. We also obtain optimal solutions for the case where the channel is coordinated. Contrary to the results provided for one-manufacturer, one-retailer channels, we find that coop advertising may not be profitable for the retailers or for the channel, especially when the market is characterised by low levels of price competition and high advertising competition between retailers. Although it benefits the manufacturer, the total effect of cooperative advertising on the channel profit might be negative under such conditions. The results also show that coop advertising stimulates retailers' spending but may result in lower advertising expenditures than for a fully coordinated channel. Finally, when coop advertising benefits the entire channel, it does not fully achieve results from vertical integration.

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“…In these studies, the e ects of various competitive behaviors on cooperative advertising policies (i.e., competition on price or advertising plans) are investigated. For example, Chutani and Sethi [27] studied a supply chain with a manufacturer and two competing retailers. They assumed that retailers play a di erential Nash game in choosing their strategies; Karray and Zaccour [28] studied a channel including two manufacturers and two retailers in which the national advertising e orts are speci ed as an exogenous parameter instead of decision variable; Zhang and Xie [29] studied a channel with multiple retailers for investigating the impact of the retailer's multiplicity on members' decision and total e ciency.…”

Section: Literature Reviewmentioning

confidence: 99%

Supply chain coordination via two-way cooperative advertising contract considering competing retailers

Alaei

Setak

2016

Scientia Iranica

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This article addresses an optimization problem using Game Theory in an advertising environment, where decisions regarding the advertising expenditure of a supply chain members must be determined. We study a cooperative (Co-op) advertising problem in a channel comprised of one manufacturer and two competing/cooperating retailers. The manufacturer leads the channel and Stackelberg game is played between the echelons. Moreover, the retailers in the downstream echelon can adopt either Collusion or Stackelberg behavior. The possibility of coordination via a two-way subsidy strategy is discussed under two scenarios in which either the participation rates are exogenously speci ed or the members endogenously decide on these rates. It is shown that the perfect coordination of the channel is obtained via a two-way subsidy strategy in the exogenous scenario. Furthermore, under the endogenous scenario, with the whole system point of view, the two-way subsidy strategy is superior to the traditional one-way strategy.

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Optimal Advertising and Pricing in a Dynamic Durable Goods Supply Chain

Cited by 60 publications

References 28 publications

On a New Paradigm of Optimal Reinsurance: A Stochastic Stackelberg Differential Game Between an Insurer and a Reinsurer

On a New Paradigm of Optimal Reinsurance: A Stochastic Stackelberg Differential Game Between an Insurer and a Reinsurer

Cooperative advertising in a supply chain with retail competition

Supply chain coordination via two-way cooperative advertising contract considering competing retailers

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