This document summarizes a research paper that develops a dynamic cooperative advertising model for a manufacturer-retailer supply chain. The model considers the important phenomenon that advertising has a positive effect on consumers' reference prices. 

The model assumes that both consumers' goodwill and reference prices for products are influenced by advertising over time. Advertising levels, goodwill, and reference prices all positively impact sales. Using differential game theory, the paper formulates the optimal advertising decisions for the manufacturer and retailer under Stackelberg and cooperative game scenarios. It also proposes a new mechanism for the supply chain members to share each other's advertising costs.

O - 2013 - Zhang - Supply Chain Coordination Through Cooperative Advertising With Reference Price Effect. PDF

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