A Survey of Stackelberg Differential Game Models in Supply and Marketing Channels

Journal of Systems Science and Systems Engineering, Vol. 16, No. 4, pp. 385-413, December 2007

29 Pages Posted: 11 Dec 2007 Last revised: 27 Mar 2014

Xiuli He

University of North Carolina at Charlotte

Ashutosh Prasad

University of Texas at Dallas - Naveen Jindal School of Management

Suresh Sethi

University of Texas at Dallas - Naveen Jindal School of Management

Genaro Gutierrez

University of Texas at Austin - Red McCombs School of Business

Date Written: December 1, 2007

Abstract

Stackelberg differential game models have been used to study sequential decision making in non-cooperative games in diverse fields. In this paper, we survey recent applications of Stackelberg differential game models to the supply chain management and marketing channels literatures. A common feature of these applications is the specification of the game structure: a decentralized channel composed of a manufacturer and independent retailers, and a sequential decision procedure with demand and supply dynamics and coordination issues. In supply chain management, Stackelberg differential games have been used to investigate inventory issues, wholesale and retail pricing strategies, and outsourcing in dynamic environments. The underlying demand typically has growth dynamics or seasonal variation. In marketing, Stackelberg differential games have been used to model cooperative advertising programs, store brand and national brand advertising strategies, shelf space allocation, and pricing and advertising decisions. The demand dynamics are usually extensions of the classical advertising capital models or sales-advertising response models. We begin by explaining the Stackelberg differential game solution methodology and then provide a description of the models and results reported in the literature.

Keywords: Stackelberg differential games, supply chain management, marketing channels, open-loop equilibria, feedback policies, channel coordination, optimal control

JEL Classification: M31, M37, C61, C73, M00, C7, M3, C72

Suggested Citation

He, Xiuli and Prasad, Ashutosh and Sethi, Suresh and Gutierrez, Genaro, A Survey of Stackelberg Differential Game Models in Supply and Marketing Channels (December 1, 2007). Journal of Systems Science and Systems Engineering, Vol. 16, No. 4, pp. 385-413, December 2007. Available at SSRN: https://ssrn.com/abstract=1069162

Xiuli He (Contact Author)

University of North Carolina at Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States

Ashutosh Prasad

University of Texas at Dallas - Naveen Jindal School of Management ( email )

800 W Campbell Road
Richardson, TX 75080
United States

Suresh Sethi

University of Texas at Dallas - Naveen Jindal School of Management ( email )

800 W. Campbell Road, SM30
Richardson, TX 75080-3021
United States

Genaro Gutierrez

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

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