Research On The Cooperative Adverting Decision Of Peer-induced Fairness And Pricing

Cooperative advertising plays a significant role in supply chains and is commonly used in the practice as a strategy to improve the distribution channels. It refers that the manufacturer shares part of cost of the retailer’s local advertising to increase their sales. In this paper, using one manufacturer and two retailers as the research object, we not only study the influence of the advertising on sales, but also consider the impact of combination of wholesale price and retail price on sales. Then we introduce the social fairness theory in the field of social cognitive psychology of the behavioral economics to the cooperative advertising decisions.First, this article systematically elaborates and summarizes foreign and domestic research achievements with regard to cooperative advertising which involve the level of advertising and subsidy rate, joint decisions of pricing of the products as well as cooperative advertising, and cooperative advertising considering fairness preference.Then this paper studies the influence of joint decisions of the pricing and the cooperative advertising. We discuss the impact of the local advertising on optimal decision in terms of Nash game, Stackelberg game and cooperative game respectively. The research has shown that the whole profit in cooperative situation is not always the most optimal.We should analyze the various relevant factors before making decisions.Finally, the article discusses the cooperative advertising decisions considering two kinds of peer fairness preference. We analyze the effects on the optimal decision-making of the fairness from the cooperative and non-cooperative game. The research shows that retailers would rather sacrifice opponent even their own profits in order to obtain expected fairness.