Advertising Strategy Of Upstream Enterprise:the Role Of Retailer Countervailing Power

In recent years,the structure of the industry chain has changed a lot,from the traditional upstream seller power gradually changing to the new type of the downstream retailer power of the new vertical structure.Consumption patterns and vertical relationship of the traditional retail industry chain have been changed huge by countervailing power that emerged because of the increasing of retail industry concentration.So academia and policy-making departments have paid great attention to this phenomenon.This paper is based on the effect of countervailing power,considered the upstream producers advertising strategies to achieve a optimal level of profits against,when downstream retailers countervailing power and competition are increasing.The results can be used to explain strategic behavior and theoretical basis for industry competition policy.The paper contains five chapters:introduction,literature review,the impact of single retailer's countervailing power or no power on upstream manufacturers' advertising strategies when upstream is monopoly and downstream retailers are duopoly,and the last part is conclusion.This paper analyzes the choice of upstream advertising allocation strategy to achieve the final market equilibrium issues.The article's mainly researches are summarized as follows:Firstly,according to vertical structure of upstream is monopoly and downstream retailers are duopoly,the paper construct an dynamic game model based on retailers in competition about price and cooperating with supplier,to analyze the effect of competition on upstream supplier's advertising allocation strategies,as well as market equilibrium.The result shows that competition enhances the supplier's advertisement input,makes the profit of industrial chains increasing.Secondly,I compare the upstream advertising allocation strategy in two cases that downstream is symmetry and asymmetric,and compare this results with the third chapter,to analyze the impact of competition on upstream supplier's advertising allocation strategies,and market equilibrium with countervailing power.This study is based on the previous studies that the retailer's countervailing power can affect industrial structure.Finally,the conclusion of this paper shows that industry chain firms have willingness to participate in sharing advertisement input in a certain countervailing power when downstream retailers exist in differentiated competition.In addition,the paper studies the optimal proportion of the upstream allocation advertisement and explains the effect of the product substitution and countervailing power,enriching the theory on the influence of buyer countervailing power,but also further extension of previous advertisement sharing literature.