Georges Zaccour

Dynamic Marketing Strategies in a Two-Member Channel

The paper is concerned with intertemporal conflict and cooperation between a manufacturer and a retailer in a vertical marketing channel. The setup is a differential game model of pricing and advertising. First, we identify a number of issues that must be addressed when the parties wish to establish and sustain a coordinated outcome. Second, we study Markovian marketing strategies in a game of simultaneous play. These outcomes will serve as disagreement outcomes if cooperation fails to be established. Third, a cooperative solution is identified, invoking some basic requirements of such a solution.