Pricing and advertising the relief goods under various information sharing scenarios

We study the strategic implications of the advertising and pricing problem with market disruptions where a manufacturer sells relief goods to the end customers through a retailer in a natural disaster. We focus on the impact of forecast and value of keeping information private on advertising and pricing decisions. Three information cases, including noninformation sharing (N), information sharing (I), and retailer forecasting (R), are studied. For each case, we derive the optimal national advertising effort and wholesale price for the manufacturer, and the optimal local advertising effort and retail price for the retailer. We then compare the three cases and derive conditions under which the two parties should share information with each other. Results of extensive numerical experimentation are also presented.

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