Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris

Exercise 37

Suppose an enhanced effectiveness of cooperative advertising occurs if the distributor shares its superior on-the-spot information about current trends in the marketplace with the manufacturer. Explain how each of the following would affect the information-sharing objective:
a. All details of co-op advertising are agreed to up front in the franchise contract.
b. Advertising is pursued independently by the manufacturer and the retail distributor.
c. Cooperative advertising allowances are rebated to the distributor out of the franchise fees.