Research On Principal-agent Of Vertical Cooperative Advertising In Supply Chain

This paper studies the principal-agent relationship between manufacturer and distributor in cooperative advertising of supply chain.With the increasingly fierce market competition,cooperation among members of the supply chain is becoming more and more close,Cooperative advertising is one of the important ways.Information asymmetry exists in the process of cooperative advertising in supply chain.How can manufacturers effectively encourage distributors to carry out cooperative advertising?There are complex competitive relationships among distributors.How does competition affect the advertising decisions of supply chain members?A distributor distributes multiple different brands of products at the same time,and a manufacturer entrusts multiple distributors to sell their own products at the same time.How does this cross-cutting principal-agent relationship among members of the supply chain affect the cooperative advertising behavior of members of the supply chain?Based on the above questions,this paper uses principal-agent theory and cooperative advertising theory to study the vertical cooperative advertising contract between manufacturers and distributors in supply chain.It mainly focuses on the following issues:?How information affects the advertising decision-making of supply chain members;?The role of competition among distributors in cooperative advertising decision-making of supply chain;?Whether the interaction under the principal-agent framework makes cooperative advertising decision-making more complex.By studying the vertical cooperative advertising behavior among members of the supply chain,this paper explores the law of cooperative advertising,and provides a reference for improving the efficiency of cooperative advertising among members of the supply chain.Based on the above concerns,the following research work has been carried out.Firstly,by studying the adverse selection problem in cooperative advertising in supply chain,this paper analyses the influence of distributor's advertising ability information on cooperative advertising,and puts forward economic explanations for the inefficiency and waste of advertising cost in advertising.Then,the principal-agent model of non-competitive cooperative advertising among distributors is established by using multi-agent theory.The investment efforts,advertising subsidies and manufacturer's income of supply chain members in cooperative advertising under non-competitive situation among distributors are discussed.The influence of advertising investment effort information on the equilibrium solution of cooperative advertisement is analyzed,Establishing analytical benchmarks for further research on cooperative advertising under the condition of competition and interaction among supply chain members.Next,according to the logical relationship between manufacturer and distributor in the supply chain,the principal-agent model of cooperative advertisement is extended from simple to complex.Firstly,the principal-agent model of cooperative advertisement in the competitive state of distributors is extended to the principal-agent model of cooperative advertisement in the competitive and interactive state of distributors.The equilibrium solution of cooperative advertisement in different situations is compared.The influence of advertising investment effort information,competition,advertising elasticity and other parameters on cooperative advertising decision-making is verified by numerical analysis.Finally,based on the manufacturer's perspective,the management suggestions to improve the efficiency of cooperative advertising in supply chain are put forward.In a word,research activities are carried out from three aspects around several concerns.Firstly,the influence of distributor's advertising ability and advertising investment effort information of members of supply chain on cooperative advertising is studied.Secondly,it compares and analyses the cooperative advertising decision-making of distributors with or without competition.Thirdly,it studies the complex situation of interactive principal-agent cooperative advertising decision-making under distributor competition.Through the above research work,and using mathematical and numerical methods to analyze the game equilibrium solutions under different situations,the following main conclusions are drawn:(1)Whether information is symmetrical or asymmetrical,manufacturers' national advertising investment efforts increase with the increase of their advertising elasticity,while distributors' advertising investment efforts decrease with the increase of national advertising elasticity.The greater the elasticity of national advertising,the higher the wholesale price of products,the greater the proportion of manufacturers in the total profits of supply chain.(2)The competition intensity between distributors must be within a certain threshold,otherwise cooperative advertising will not be realized.When there is only one manufacturer's brand product in the market,the competition relationship between distributors is only intra-brand competition.The intra-brand competition under information symmetry does not affect the advertising investment efforts of manufacturers and distributors,as well as advertising subsidies and profits of manufacturers.Under information asymmetry,the greater intra-brand competition,the greater the advertising investment efforts of manufacturers and distributors.When the number of manufacturers is more than one,the competition among distributors includes not only intra-brand competition but also inter-brand competition.Under information symmetry,intra-brand competition of distributors does not affect cooperative advertising,while inter-brand competition of distributors affects cooperative advertising.Under information asymmetry,cooperative advertising is affected by all competition,and the overall competition among distributors increases the advertising investment efforts of the members of the supply chain and the profit of the manufacturer.(3)Advertising subsidies under information symmetry are not affected by price elasticity.Advertising subsidies under information asymmetry increase with the increase of price elasticity.Manufacturers provide more advertising subsidies for products with high price elasticity.(4)Under information asymmetry,the wholesale-retail price ratio is higher than that under information asymmetry.Under information asymmetry,manufacturers increase incentives to distributors'profit share and increase distributors' risk-taking.Under information asymmetry,Under asymmetric information,the wholesale-retail price ratio increases with the increase of national advertising elasticity and the competitiveness of distributors,which means that manufacturers reduce incentives for distributors to share profits.The more intense the competition among distributors and the greater the role of manufacturers in cooperative advertising,the less inclined manufacturers are to allocate profits to distributors.(5)Distributor's Advertising Ability as Private Information,under the asymmetric information,the advertising subsidy of low-capacity distributors first decreases and then increases with the increase of the probability of high-capacity distributors,while the advertising subsidy of high-capacity distributors decreases with the increase of their own probability;when the probability of high-capacity distributors exceeds a certain value,the advertising subsidy of low-capacity distributors continues to expand higher than that of high-capacity distributors.Cooperative advertising resource allocation is inefficient.The article has the following innovations:(1)This paper studies the adverse selection of distributors in cooperative advertising under asymmetric information.The ability of distributors to advertise is private information.It provides an economic explanation for the inefficiency of advertising fees and distorted allocation of resources.(2)Embedding the competition of distributors into the multi-agent model of cooperative advertising enriches the content of cooperative advertising research.This paper studies the effects of distributors competition on cooperative advertising efforts,advertising subsidies and manufacturer's earnings under the multi-agent framework.(3)Under the framework of multi-agent,the interactive principal-agent model of cooperative advertising competition among distributors is established,which enriches the principal-agent research.