A game theoretic approach for pricing and choosing promotional partnership type for two complementary products and one independent product

This study examines how a leading firm can optimally select promotional partners in a market comprising three firms: two offering complementary products and one selling an independent product. Using a game-theoretic framework based on a Stackelberg model, in which the leading firm acts as the decision-maker, four promotional partnership scenarios are analyzed: no cooperation, cooperation with one complementary firm, cooperation with both complementary firms, and full collaboration between all three firms. Factors such as product complementarity, price elasticity, promotional effectiveness, and market share distribution can influence the firm's optimal promotional strategy. When individual promotions are effective and complementarity is strong, firms prefer alliances with complementary partners. Conversely, when complementarity leads to market cannibalization or when other firms possess larger market shares, the leading firm may favor partnering with the independent firm. Cooperation among all firms tends to be the most profitable when feasible. This research offers practical insights for managers seeking to enhance the impact of promotional alliances. It contributes to the literature by extending previous models through a hierarchical Stackelberg framework, thereby extending prior cooperative advertising models to incorporate both complementary and independent products under asymmetric brand reputation. Furthermore, although the analysis is theoretical, it provides a conceptual basis for future empirical validation using real or simulated market data.

کلیدواژه ها:

Partnership agreement ، Complementary Products ، Independent Product ، Reputation asymmetry ، Stackelberg ، game theory