Contracting Supply Chains Considering Retailers’ Marketing Efforts

Abstract

Strategic cooperation has garnered significant attention in business. In this study, we explored the operating mechanisms of supply chains utilizing three Stackelberg models, in the following ascending order of cooperation level: price only, marketing cost sharing, and cross-shareholding. Further, we investigated the impact of cooperation on prices, marketing efforts, and profits, and analyzed the strategic cooperation preferences of different supply chain members. The results show that the influence of the level of cooperation on the wholesale and selling price is nonlinear. Interestingly, increased levels of cooperation do not always result in better outcomes. The marketing cost-sharing strategy aggravates the marketing burden on retailers. In contrast, the cross-shareholding strategy not only increases the total marketing effort level, but also efficiently reduces the burden of marketing on retailers. Moreover, all cooperation strategies solely benefit manufacturers rather than retailers, and not all of them improve the supply chain’s performance. Finally, the cross-shareholding cooperation strategy only maximizes the consumer surplus and social welfare under certain conditions. Overall, our study describes the operational mechanisms of diverse cooperative strategies and provides managerial guidance for those seeking to enhance marketing efforts and economic and social performance using a cooperation strategy.