Limit pricing with complementary goods

2011 ◽  
Vol 6 (2) ◽  
pp. 215-224 ◽  
Author(s):  
Jorge Tarziján
Keyword(s):  
Dynamic Game ◽  
Entry Deterrence ◽  
Managerial Implication ◽  
Content Type ◽  
Limit Pricing ◽  
Equilibrium Limit ◽  
Multiple Markets ◽  
Limit Price ◽  
Complementary Product ◽  
Complementary Goods

PurposeThis paper aims to examine the equilibrium limit price charged by a producer trying to deter the entry of a firm that can choose one of the two markets of complementary goods.Design/methodology/approachThe authors model a dynamic game of incomplete information solved using a “perfect Bayesian equilibrium” approach.FindingsIt is shown that an incumbent will be willing to spend more resources – i.e. charge a lower limit price – to deter entry into its market as products become more complementary. This is because additional benefits are gained from entry deterrence by facing a more competitive market in the complementary product. The additional benefits of entry deterrence are shown to be a function of the degree of complementarity between goods.Practical implicationsA managerial implication of this article is that firms are willing to compete more fiercely to send an entrant to the other's incumbent market as the degree of complementarity between goods increases. An interesting conclusion that is derived from the above analysis is that managers should invest to understand the interdependences (e.g. complementarities) of the goods they sell, since the strategic variables chosen to compete may be affected by them, in some cases in a non‐trivial way.Social implicationsFrom a public policy perspective, the main contribution of this paper is to point out that regulators who analyze predatory pricing, or other (probably) illegal “low‐price strategies”, should consider the degree of complementarity between goods and its effect on pricing.Originality/valueAs far as the authors' knowledge goes, there are no other papers that analyze entry decisions involving multiple markets of complementary goods.

Dynamic supplier selection approach for mining equipment company

2019 ◽  
Vol 14 (1) ◽  
pp. 77-105 ◽  
Author(s):  
Md. Tanweer Ahmad ◽  
Sandeep Mondal
Keyword(s):  
Sensitivity Analysis ◽  
Supplier Selection ◽  
Business Environment ◽  
Spare Parts ◽  
Mixed Integer ◽  
Optimal Order ◽  
Mining Equipment ◽  
Order Allocation ◽  
Managerial Implication ◽  
Content Type

PurposeThis paper aims to address the supplier selection (SS) problem under dynamic business environments to optimize the procurement cost of spare-parts in the context of a mining equipment company (MEC). Practically, involved parameters’ value does not remain constant as planning periods due to fluctuation in the demand and their market dynamics. Therefore, dynamicity in the parameter is considered as an important factor when a company forms a responsive chain through most eligible suppliers with respect to planning periods. This area of study may be considered for their complexities to the approaches toward order-allocations with bi-products of unused and repair spare-parts.Design/methodology/approachAn integrated methodology of analytic hierarchy process (AHP) and mixed-integer non-linear programming (MILP) is implemented in the two stages during each planning periods. In the first stage, AHP is used to obtain the relative weights with respect to each spare-parts of each criterion and based on that, the ranking is evaluated in accordance with case considered. And in the second stage, MILP is formulated to find the allocations of each spare-part with two distinct approaches through Model-1 and Model-2 separately. Moreover, Model-1 and Model-2 are outlined based on the ranking and efficient parameters-value under cost, limited capacities, quality level and delay lead time respectively.FindingsThe ranking and their optimal order-allocation of potential suppliers are obtained during consecutive planning periods for both unused and repair spare-parts. Subsequently, sensitivity analysis is conducted to deduce the key nuggets with the comparison of Model-1 and Model-2 in the changing of capacity, demand and cost per spare-parts. From this analysis, it is found that suppliers who have optimal parameter settings would be better for order-allocations than ranking during the changing planning period.Practical implicationsThis paper points out the situation-specific approach for SS problem for a mining industry which often faces disruptive supplying environments. The managerial implication between ranking and parameters are highlighted through Model-1 and Model-2 by sensitivity analysis.Originality/valueIt provides useful directions for managers who are involved in the procurement of spare-parts in the mining environment. For this, suppliers are selected for order-allocation by using Model-1 and Model-2 in the dynamic business environment. The solvability of the model is presented using LINGO 17. Furthermore, the case company selected in this study can be extended to other sectors.

Exploring female entrepreneurs’ marketing decisions with a heuristics and biases approach

2019 ◽  
Vol 34 (8) ◽  
pp. 623-643 ◽  
Author(s):  
Pouria Nouri ◽  
Narges Imanipour ◽  
Abdollah Ahmadikafeshani
Keyword(s):  
Decision Making ◽  
The Body ◽  
Incremental Innovation ◽  
Heuristics And Biases ◽  
Female Entrepreneurs ◽  
Managerial Implication ◽  
Content Type ◽  
Entrepreneurial Marketing ◽  
Positive Effects ◽  
Practical Implications

Purpose This study furthers the body of knowledge on entrepreneurial decision-making, entrepreneurial marketing and female entrepreneurs by exploring practical implications of heuristics and biases in female entrepreneurs’ marketing decisions. Heuristics and biases influence many entrepreneurial decisions. Moreover, some of the most important entrepreneurial decisions are marketing-related. Given that the entrepreneurial marketing behavior emanates from entrepreneurial thinking and decision-making, one may conclude that female entrepreneurs’ marketing decisions are susceptible to heuristics and biases. This paper aims to explore the outcomes of heuristics and biases in entrepreneurial marketing decisions. Design/methodology/approach Data were collected by conducting semi-structured interviews with 19 Iranian female biotech entrepreneurs and analyzed by thematic analysis. Findings The findings indicate that introducing pioneering products to the market, overestimating product’s market appeal, unprepared entry, underestimating the competition, overcoming entry impediments, entry postponement, growth, success in incremental innovation and failure in radical innovation are the main outcomes of the identified heuristics and biases in the female entrepreneurs’ marketing decisions. Practical implications This paper has some precious practical implications for marketers as well as female entrepreneurs running small businesses. Generally speaking, reducing the negative impacts of the identified heuristics and biases of this study while enhancing their positive effects will increase the chances of female entrepreneurs to compete and succeed in tumultuous markets. Furthermore, our most important managerial implication is regarding overconfidence, which was very common in the female entrepreneurs’ marketing decisions by having various positive and negative outcomes. Thus, female entrepreneurs should be careful of this fateful bias in their decisions by knowing the most common signs of overconfidence. Originality/value This paper is unique because of not only identifying the main heuristics and biases but also their major outcomes in entrepreneurs’ major marketing decisions. Moreover, this paper is a pioneer in exploring heuristics and biases in female entrepreneurs’ decisions.

Daring to tap external strategic resources: competitive advantage in global industries

2019 ◽  
Vol 40 (3) ◽  
pp. 25-35 ◽  
Author(s):  
Stuart Orr
Keyword(s):  
Supply Chain ◽  
Content Type ◽  
External Resources ◽  
Internal Resources ◽  
External Focus ◽  
Strategic Resources ◽  
Balanced Approach ◽  
Complementary Product ◽  
New Business ◽  
Practical Implications

Purpose In addition to their internal resources, companies in most industries rely upon external strategic resources to maintain and improve their performance. External strategic resources have a similar effect on competitiveness but are located in the company’s networks or even in unrelated industries. Some companies underuse these resources, while other companies focus too strongly on accessing external resources in their own industry, which results in hyper-competition. This paper aims to explain how different industries use external resources and describes the criteria for a balanced approach which leads to knowledge transfer, diversity and supports the development of new business. Design/methodology/approach Examples and evidence from four different industries are used to identify the different approaches for accessing external strategic resources. Findings Valuable external strategic resources are non-transferable, located in a complementary product organisation, knowledge-oriented, located in a different country, preferably not part of the organisation’s primary external focus (e.g. supply chain), able to introduce diversity and innovation and are compatible with network behaviours. Practical implications External strategic resources are frequently found within the organisation’s supply chain, however, use of these resources should be balanced by external resources from non-related industries to increase diversity and reduce the likelihood of hyper-competition. Originality/value This paper explains why external strategic resources are valuable, identifies the different approaches to accessing them, describes the benefits and drawbacks associated with each approach and provides the key criteria for identifying a valuable external strategic resource.

The influence of platform service innovation on value co-creation activities and the network effect

2017 ◽  
Vol 28 (2) ◽  
pp. 348-388 ◽  
Author(s):  
Wenhui Fu ◽  
Qiang Wang ◽  
Xiande Zhao
Keyword(s):  
Case Study Research ◽  
Service Innovation ◽  
Network Effect ◽  
Maturity Stage ◽  
Managerial Implication ◽  
Content Type ◽  
Building Relationships ◽  
Stage Of Development ◽  
Depth Analysis ◽  
Expansion Stage

Purpose The purpose of this paper is to explore the properties of platform service innovation and its relationship to value co-creation activities and the network effect. This is done over the course of a platform’s evolution through three stages: emergence, expansion and maturity. Design/methodology/approach Based on grounded theory, this study adopts a multiple case study research design. An in-depth analysis of the case data is done using ATLAS.TI software. Findings At the emergence stage, platform service innovations focus on building infrastructure. Platform owners stimulate the network effect directly via platform service innovations, rather than indirectly via value co-creation activities. At the expansion stage, the platform service innovations focus on building relationships among platform owner and different sides of participants. Platform owners stimulate the network effect indirectly, via value co-creation activities, rather than directly via platform service innovations. At the maturity stage, platform service innovations focus on building an environment for the platform ecosystem. Platform owners stimulate the network effect indirectly, via value co-creation activities rather than directly. Originality/value This research contributes to the service innovation literature by exploring the properties of platform service innovation and its relationship to value co-creation activities and the network effect from a longitudinal perspective. The principal managerial implication is that platform managers need to consider the developmental stage of the platform, as a mismatching of stage of development (emergence/expansion/maturity) and focus (an orientation toward building infrastructure, relationships or environment) may lead to a failure to stimulate or enhance the network effect.

Use of dynamic pricing strategies by Airbnb hosts

2018 ◽  
Vol 30 (1) ◽  
pp. 2-20 ◽  
Author(s):  
Chris Gibbs ◽  
Daniel Guttentag ◽  
Ulrike Gretzel ◽  
Lan Yao ◽  
Jym Morton
Keyword(s):  
Dynamic Pricing ◽  
Design Methodology ◽  
Sharing Economy ◽  
Host Factors ◽  
Pricing Strategies ◽  
High Demand ◽  
Content Type ◽  
Multiple Markets ◽  
Hotel Managers ◽  
Practical Implications

Purpose The purpose of this paper is to provide a comprehensive analysis of dynamic pricing by Airbnb hosts. Design/methodology/approach This study uses attribute and sales information from 39,837 Airbnb listings and hotel data from 1,025 hotels across five markets to test different hypotheses which explore the extent to which Airbnb hosts use dynamic pricing and how their pricing strategies compare to those of hotels. Findings Airbnb is a unique and complex platform in terms of dynamic pricing where hosts make limited use of dynamic pricing strategies, especially as compared to hotels. Notwithstanding their limited use, hosts who own listings in high-demand leisure markets, manage entire places, manage more listings and have more experience vary prices the most. Practical implications This study identified a great need for Airbnb to encourage dynamic pricing among its hosts, but also warned of the potential perils of dynamic pricing in the sharing economy context. The findings also demonstrated challenges for hotel managers interested in actionable information related to Airbnb as a competitor. Originality/value This is the first Airbnb study to use a comprehensive set of data over a continuous period in multiple markets to look at a number of listing and host factors and determine their relation with dynamic pricing strategies.

Value-added service investment strategy of a two-sided platform with the negative intra-group network externality

Kybernetes ◽  
2018 ◽  
Vol 47 (5) ◽  
pp. 937-956 ◽  
Author(s):  
Guowei Dou ◽  
Xudong Lin ◽  
Xiaoping Xu
Keyword(s):  
Game Theory ◽  
Negative Impact ◽  
Dynamic Game ◽  
Value Added ◽  
Investment Strategy ◽  
Network Externality ◽  
Sensitive Analysis ◽  
Content Type ◽  
Value Added Service ◽  
Dynamic Game Theory

Purpose Considering the resource constraint, this paper aims to study how to make value-added service (VAS) investment strategy considering the negative intra-group network externality on the seller side from the perspective of a two-sided platform. Design/methodology/approach The authors use the dynamic game theory, optimization, sensitive analysis and numerical study in this research. The authors model their research question from the perspective of the dynamic game theory, and through optimizing the platform’s profit function, the equilibrium results in terms of VAS investing and pricing strategies are derived. To explore the characteristics of the optimal strategies, sensitive analysis is used, and numerical studies are conducted to further illustrate the analytical results. Findings It is found that the intra-group network externality is not necessarily the determinant for VAS investment strategy, and its overall negative impact can be overtaken by the investment in certain conditions. The optimal VAS investment level decreases in the negative intra-group network externality. Though the VAS investment is on the seller side, it has either positive or negative impact on the pricing for buyers. Moreover, for a stronger intra-group network externality among sellers, the two-sided prices could either increase or decrease. Research limitations/implications The authors implicate how the intra-group network externality reduces the investment benefit and impacts the other side users. The limitation of considering the intra-group network externalities on only one side needs further extension. Practical implications The authors provide insights for platform operators in how to use recourse to improve users’ utility and how to price the two sides when competition exists on the seller side. Originality/value This study specifies the role of negative intra-group network externality in determining the investment and pricing strategy of a two-sided platform in addition to the positive inter-group network externality.

Building regulatory capabilities for pharmaceutical firms' internationalization

2013 ◽  
Vol 7 (1) ◽  
pp. 58-74 ◽  
Author(s):  
Sudhir Yadav
Keyword(s):  
Process Model ◽  
International Markets ◽  
Regulatory Function ◽  
Target Market ◽  
Regulatory Requirements ◽  
Content Type ◽  
Pharmaceutical Firms ◽  
Multiple Products ◽  
Multiple Markets ◽  
Functional Areas

PurposeThe internationalization of pharmaceutical firms faces major barriers in terms of managing regulatory requirements in various international markets. This paper aims to identify the requirements related to regulations in various markets of the world. It further seeks to identify how the firms develop such capabilities i.e. processes undertaken by the firms to develop regulatory capabilities.Design/methodology/approachThe research is exploratory in nature. Case study method is adopted to study the requirements related to regulations in international markets and processes to build regulatory capabilities.FindingsTo manage regulatory requirements firms need knowledge related to plant approval and product registration. Firms have to submit dossiers to the respective country's regulatory authority to get plant approval and product registration. They can simultaneously apply for both to save time to enter the target market. The requirements for each market are unique in terms of format and contents for dossier preparation. Dossier preparation needs data from various departments which calls for good coordination among various functional areas, i.e. production, QA and QC, R&D, purchasing, etc. If the firm has operations in multiple markets and offers multiple products in a single market the regulatory function is separately organized for less regulated, semi‐regulated and regulated markets.Practical implicationsPharmaceutical firms targeting international markets can get insight into the regulatory requirements and the process to be adopted to build regulatory requirements.Originality/valueThe paper shows that firms use a systematic process to build capabilities for managing regulations. The paper also offers a process model for firms to build regulatory capabilities for internationalization.

scholarly journals Optimal capital structure and the debtholder-manager conflicts of interests: a management decision model

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olanike Akinwunmi Adeoye ◽  
Sardar MN Islam ◽  
Adeshina Israel Adekunle
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Differential Game ◽  
Agency Problem ◽  
Dynamic Game ◽  
Cost Of Debt ◽  
Conflicts Of Interests ◽  
Content Type ◽  
Optimal Capital Structure ◽  
Optimal Capital

Purpose Determining the optimal capital structure becomes more complicated by the presence of an agency problem. The issuance of debt as a corporate governance mechanism introduces the asset substitution problem – the agency cost of debt. Thus, there is a recognized need for models that can resolve the agency problem between the debtholder and the manager who acts on behalf of the shareholder, leading to optimal capital structure choice, and enhanced firm value. The purpose of this paper is to model the debtholder-manager agency problem as a dynamic game, resolve the conflicts of interests and determine the optimal capital structure. Design/methodology/approach As there is no satisfactory model for dealing with the above issues, this paper uses a differential game framework to analyze the incongruity of interests between the debtholder and the manager as a non-cooperative dynamic game and further resolves the conflicts of interests as a cooperative game via a Pareto-efficient outcome. Findings The optimal capital structure required to minimize the marginal cost of the agency problem is a higher use of debt, lower cost of equity and withheld capital distributions. The debtholder is also able to enforce cooperation from the manager by providing a lower and stable cost of debt and a greater debt facility in the overtime framework. Originality/value The study develops a new dynamic contract theory model based on the integrated issues of capital structure, corporate governance and agency problems and applies the differential game approach to minimize the agency problem between the debtholder and the manager.

Early bird or versioning

2019 ◽  
Vol 32 (3) ◽  
pp. 769-792
Author(s):  
Mingchun Chen ◽  
Zhiying Liu ◽  
Chaoliang Ma
Keyword(s):  
Dynamic Game ◽  
Good Choice ◽  
Pricing Strategy ◽  
Pricing Strategies ◽  
Content Type ◽  
Early Bird ◽  
Bayesian Equilibrium ◽  
Dynamic Game Model ◽  
Selection Of

Purpose Crowdfunding, especially reward-based crowdfunding, has quickly evolved into a commonly used vehicle for innovating entrepreneurs to develop their products. Many crowdfunding platforms allow creators maximum flexibility in terms of the prices and rewards offered in a project to gain sufficient capital. However, creators need to understand how to design project rewards and how to select a pricing strategy, in addition to whether the creator should spend resources on designing multiple rewards of varying quality. The purpose of this paper is to address these issues by answering whether and why there are significant differences in the application of early-bird and versioning pricing strategies in crowdfunding. Design/methodology/approach This paper develops a two-stage dynamic game model with incomplete information, proposes a corollary calculated by analyzing a perfect Bayesian equilibrium, and then tests Corollary 1 by empirical analysis. Findings Contrary to the findings of other studies, the results show that an early-bird pricing strategy is likely better than a versioning pricing strategy for earning greater revenue in a crowdfunding context, on average. This finding means that creators do not have to spend as much in designing rewards of various qualities; rather, they should only provide multiple price options for high-quality rewards. However, if the heterogeneity of target backers’ valuations and the quality difference between two types of products are adequately high, a versioning pricing strategy may be a good choice for creators. Practical implications This paper provides a reference for creators regarding the selection of pricing strategies and the design of reward quality when launching crowdfunding projects. Originality/value This paper explains an interesting and practical issue in the design of reward quality and the selection of a pricing strategy after fully considering the role of the crowdfunding all-or-nothing mechanism and special backer behavior.

Solo economy in Taiwan: a quality study of click-and-mortar malls

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chih-Chin Liang
Keyword(s):  
Service Quality ◽  
East Asia ◽  
Customer Loyalty ◽  
Perceived Value ◽  
Corporate Image ◽  
Asia Pacific ◽  
Equation Modeling ◽  
Managerial Implication ◽  
Content Type ◽  
The Impact

Purpose The rapid growth of the solo economy in the Asia-Pacific area indicates an economic transition. In East Asia, solitary households are growing along with low marital rates and birth rates under high economic pressure. Because of these population changes, malls must provide good quality service to meet the specific needs of solitary households and social households. The paper aims to discuss this issue. Design/methodology/approach In this study, relationships among service quality, customer satisfaction (CS), perceived value, corporate image and customer loyalty were compared between social and solitary customers of Taiwan click-and-mortar malls. The effects of five service quality dimensions on CS and customer loyalty were investigated by structural equation modeling. Findings The analytical results show that all hypothesized relationships among factors were supported with the exception of the impact of perceived value on satisfaction and the impact of the corporate image on satisfaction. Additionally, the comparison between solitary and social customers showed that service quality, corporate image and customer loyalty have strong relationships without differences between both kinds of customers. Solitary and social customers only differed in the impact of perceived value on loyalty. Practical implications The managerial implication of this study is that, to satisfy both social and solitary customers and to increase their loyalty, Click-and-mortar malls (CAM malls) should apply different service quality strategies for social and solitary customers. To satisfy both types of customers, a strategy for increasing visible cares should be applied in social customers, and a strategy for increasing the perception of reliability, assurance and visible cares should be applied in solitary customers. To enhance the loyalty of solitary customers, a CAM mall should enhance the value perceived by solitary customers, which can help CAM malls increase the loyalty of solitary customers in the solo economy. Originality/value The solo economy is a hot topic in East Asia because the issue of solo economy impacts the market. A CAM mall must evolve its business to attract solitary customers. However, no studies compared perceived quality, satisfaction, perceived value, corporate image and loyalty between solitary customers and social customers. This study is the first study investigated the business model of CAM malls.

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