A survey of game-theoretic models of cooperative advertising

• We review the literature on co-advertising in marketing channels using game theory.
• We find that a number of results carry over from static to dynamic environments.
• We also find that the work on static models is quite homogeneous.
• Few papers assumed both horizontal and vertical interactions.
• We identify directions for additional research.

The paper surveys the literature on cooperative advertising in marketing channels (supply chains) using game theoretic methods. During the last decade, in particular, this literature has expanded considerably and has studied static as well as dynamic settings. The survey is divided into two main parts. The first one deals with simple marketing channels having one supplier and one reseller only. The second one covers marketing channels of a more complex structure, having more than one supplier and/or reseller.In the first part we find that a number of results carry over from static to dynamic environments. We also find that the work on static models is quite homogeneous, in the sense that most papers employ the same basic consumer demand specification and address the same situations of vertical integration and noncooperative games with simultaneous or sequential actions. The work on dynamic problems of cooperative advertising also shows some similarities.The second part shows that models incorporating horizontal interaction on either or both layers of the supply chain are much less numerous than those supposing its absence. Participation rates in co-op advertising programs depend on inter- and intra-brand competition, and participation may not always be in the best interest of the firms in the marketing channel.