This presentation will examine a supply network structure where several tier 2 (upstream) firms compete to sell a semi-finished good to several tier 1 (downstream) firms that compete to sell a final good in an oligopoly setting. We show how a complementarity problem procedure can be used to solve and obtain a Nash equilibrium solution.

We investigate whether cooperative advertising program could constitute an effective tool to coordinate competitive marketing channels. We propose a model of marketing efforts that accounts for competition at the retail and manufacturing levels. The efficiency of the coop plan is investigated by comparing outputs from a Nash game where manufacturers do not give any participation to the dealers, and a sequential game where manufacturers play first and decide of their coop rates and retailers determine next their marketing efforts. We find that coop advertising may not be a coordinating mechanism for those members located at a channel level where competition is present.

Despite the acceptance of relationship marketing as an alternative paradigm in the marketing thought, very little has been done in formal modeling to address this issue. Using the methodology of optimal control, the paper fills this gap and proposes a model intended to assist sellers in determining their optimal relational marketing efforts.