4.6 Article

Feedback Stackelberg equilibrium strategies when the private label competes with the national brand

Journal

ANNALS OF OPERATIONS RESEARCH
Volume 164, Issue 1, Pages 79-95

Publisher

SPRINGER
DOI: 10.1007/s10479-008-0320-7

Keywords

Marketing channels; Private label; Advertising; Pricing; Differential games; Feedback-Stackelberg equilibrium

Funding

  1. NSERC, Canada
  2. FQRSC, Quebec
  3. MEC
  4. JCYL [SEJ2005-03858/ECON, VA045A06]
  5. FEDER

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We consider a noncooperative differential game where a retailer sells her own private label in addition to the manufacturer's brand. We assume that each brand's goodwill evolves according to a modified Nerlove-Arrow dynamics, in such a way that the advertising effort of one brand hurts the competitor's goodwill stock. We characterize Feedback-Stackelberg pricing and advertising strategies and employ simulations to analyze their sensitivity to the main model parameters.

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