Abstract: Since the confliction in cooperative (co-op) advertising fails to be coordinated by the popular unilateral participation strategy, three game structures, such as Manufacturer Stackelberg (MS), Retailer Stackelberg(RS)and Vertical Nash (VN), are first developed to investigates the impact of endogenous and exogenous cost-sharing rates on co-op advertising coordination. The result shows that the exogenous cost-sharing rate is capable of coordinating the entire supply chain when the competition is not fierce, while the endogenous cost-sharing rate doesn’t work well. Then, the egalitarian bargaining model is developed to examine the influence of endogenous cost sharing rate on co-op advertising coordination under different game structures. The result indicates that the endogenous cost-sharing rate can coordinate the entire supply chain under VN game. These results can provide manufacturers and retailers with decision support in terms with co-op advertising coordination. Specifically, managers who make advertising decisions should take into account both the cost sharing rate and the channel competition.

Key words: co-op advertising; competing supply chain; endogenous and exogenous cost-sharing rates; egalitarian bargaining