Does market familiarity bless multinational in strategic competition?
This paper considers a competition between two multinationals (U, J) who compete in a third market (K). The multinationals have identical cost structures, but differ in that J comes from a country that is "taste-similar" to K, and hence produces products that match more closely the preferences of K residents. This similarity gives J an advantage in K's market, and if only one firm enters, J can earn higher profits. However, we show: (i) K may benefit more from the entry of the market-familiar firm (U), and (ii) in a strategic competition between the two firms, the market-familiarity may be a strategic disadvantage.
Year of publication: |
2011
|
---|---|
Authors: | Kwon, Chul-Woo ; Lapan, Harvey E. |
Published in: |
Japan and the World Economy. - Elsevier, ISSN 0922-1425. - Vol. 23.2011, 1, p. 58-62
|
Publisher: |
Elsevier |
Keywords: | Multinationals Taste difference Market familiarity Strategic advantage |
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