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We study firms' incentives to create switching costs using a four-period model consisting of two consecutive price-competing stages intervened by options to create switching costs early (before price competition) and late (during price competition). Acknowledging that many real/social switching...
Persistent link: https://www.econbiz.de/10011117297
In markets where product quality is important, more than one characteristic is usually necessary for producers to define product quality. Standard theory maintains that: (i) in a duopoly there will be a quality leader no matter whether the product can incorporate one or two vertical attributes;...
Persistent link: https://www.econbiz.de/10010738082
consecutive periods. We derive optimal sales strategies and analyze welfare effects with and without commitment. Under commitment … initial supplies and prices increase over time. Absent commitment, sellers can adjust their supply decision after the first … ambiguous. The larger firm typically prefers not to commit, whereas the smaller firm is better off under commitment. Commitment …
Persistent link: https://www.econbiz.de/10010573863
We analyze firms' entry, production and hedging decisions under imperfect competition. We consider an oligopoly industry producing a homogeneous output in which risk-averse firms face an entry cost upon entering the industry, and then compete in Cournot with one another. Each firm faces...
Persistent link: https://www.econbiz.de/10010906759
When are technological laggards more likely to try to catch up with leaders? We offer empirical evidence on firm-level data of plant investments in the TFT-LCD panel industry, where technological competition has been intense and dynamic. We find that the followers' level of technology has a...
Persistent link: https://www.econbiz.de/10010573869
Search engines face an interesting tradeoff in choosing the way to display their results. While providing high quality unpaid, or “left side” results attracts users, doing so can also cannibalize the revenue that comes from paid ads on the “right side”. This paper examines this tradeoff,...
Persistent link: https://www.econbiz.de/10011051655
Motivated by recent developments in applied dynamic analysis, this paper presents new sufficient conditions for the existence of a Markov perfect equilibrium in dynamic stochastic games. The main results imply the existence of a Markov perfect equilibrium provided the sets of actions are...
Persistent link: https://www.econbiz.de/10010608445
Although we have many tools to understand the effect of regulation on firm entry, we know little about the importance of actual regulation enforcement. For this purpose, this paper uses data from Spain's local television industry from 1995 through 2001, which provide a unique opportunity for...
Persistent link: https://www.econbiz.de/10010738083
Competitors often collaborate by sharing a part of value-creating activities such as technology development, product design, and distribution, which are important elements for creating product distinctiveness. Competitor collaborations have recently been regarded as crucial issues by antitrust...
Persistent link: https://www.econbiz.de/10010573877
In industries with network effects, incumbents' installed bases create barriers to entry that discourage entrepreneurs from developing new innovations. Yet, entry is not the only commercialization route for entrepreneurs. We show that the option of selling to an incumbent increases the...
Persistent link: https://www.econbiz.de/10011117298