MIT-Zaragoza Speaker Series: Suresh P. Sethi

Suresh P. Sethi
Charles & Nancy Davidson Distinguished Professor of Operations Management
Director, Center for Intelligent Supply Networks (C4iSN)
The University of Texas at Dallas
Richardson, TX, USA

"Cooperative Advertising in a Dynamic Retail Market Duopoly"

Cooperative advertising is an important incentive offered by a manufacturer to influence retailers' promotional decisions. We analyze a retail market duopoly where one or both of competing retailers are supported by the manufacturer in their advertising costs. We model the problem as a Stackelberg differential game in which the manufacturer announces his shares of advertising costs of the two retailers or his subsidy rates, and the retailers in response play a Nash differential game in choosing their optimal advertising efforts over time. We obtain the feedback equilibrium solution consisting of the optimal advertising policies of the retailers and manufacturer's subsidy rates. We identify the key drivers that determine the optimal subsidy rates and, in particular, obtain the conditions under which the manufacturer will support one or both of the retailers. We analyze the extent to which cooperative advertising coordinates the channel. Finally, we investigate the impact of an anti-discriminatory act which would restrict the manufacturer to offer equal subsidy rates to the two retailers. (Co-authored with Anshuman Chutani)

Bio

Suresh P. Sethi is Charles & Nancy Davidson Distinguished Professor of Operations Management and Director of the Center for Intelligent Supply Networks at The University of Texas at Dallas. He has written 7 books and published nearly 400 research papers in the fields of manufacturing and operations management, finance and economics, marketing, and optimization theory. He teaches a course on optimal control theory/applications and organizes a seminar series on operations management topics. He serves on the editorial boards of several journals including Production and Operations Management and SIAM Journal on Control and Optimization. He was named a Fellow of The Royal Society of Canada in 1994. Two conferences were organized and two books edited in his honor in 2005-6. Other honors include: IEEE Fellow (2001), INFORMS Fellow (2003), AAAS Fellow (2003), POMS Fellow (2005), IITB Distinguished Alum (2008), SIAM Fellow (2009).