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Academic Journal of Business & Management, 2022, 4(14); doi: 10.25236/AJBM.2022.041414.

Why We Choose Cooperative Advertising? An Analysis of Channel Competition


Yueyun Zhang

Corresponding Author:
Yueyun Zhang

Lab and Equipment Management, Jiangnan University, Wuxi, 214122, China


Conventional wisdom believes that the spring-up of cooperative advertising is owing to the difference between the manufacturer's national advertising and the retailer's local advertising. This paper develops a channel competition model to investigate the efficiency when manufacturers or retailers shoulder the responsibility of advertising. It is found that if manufacturers sponsor advertising, they are likely to engage in fierce advertising competition. Yet if it is the retailers who decide the advertising volume, they have not any motivation to advertise at all! This is because all the extra earnings received from advertising would be robbed by the manufacturers. Therefore, it is claimed that cooperative advertising may be a consequence of the retailer's downstream role. In a competitive retail market, the downstream sector is not as likely as the upstream firm to invest heavily in advertising, thereby avoiding the prisoner's dilemma.


cooperative advertising, advertising competition, distribution channel

Cite This Paper

Yueyun Zhang. Why We Choose Cooperative Advertising? An Analysis of Channel Competition. Academic Journal of Business & Management (2022) Vol. 4, Issue 14: 88-92. https://doi.org/10.25236/AJBM.2022.041414.


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