Location Choice of a Partially–Private Monopoly Supplier

2021 ◽  
pp. 232102222110321
Author(s):  
Doriani Lingga ◽  
Damiana Simanjuntak
Keyword(s):  
Product Differentiation ◽  
Location Choice ◽  
Unit Length ◽  
Profit Maximization ◽  
Market Segment ◽  
Input Price ◽  
High Type ◽  
Asymmetric Duopoly ◽  
Downstream Market ◽  
Jel Classifications

This paper analyzes the location choice of an upstream monopolist who supplies input to asymmetric duopoly firms in a downstream market. The monopolist is partially private, in that it cares not only about its profit maximization but also about the survival of the downstream firms. Based on the Hotelling model, we find that the monopolist is always attracted to locate closer to the efficient downstream firm. In particular, when the efficiency difference between the two downstream firms is not too high, such that no firm is driven out of the market, the monopolist locates at a distance of 1/6 from the efficient firm in the line segment of unit length. Finally, considering the downstream firms’ survival, we show that the upstream monopolist charges a higher input price on the efficient firm. This study may be relevant to the product differentiation framework, in which firms can benefit from producing goods that are close to the preference of high-type consumers; to the pharmaceutical industry, in which pharmacy companies must cover a broad market segment; or to the policymaking process, in which policymakers may have an incentive to make a policy preferred by a particular group of the society. JEL Classifications: D42, L12, L230

scholarly journals Downstream competition and profits under different input price bargaining structures

2021 ◽  
Author(s):  
Domenico Buccella ◽  
Luciano Fanti
Keyword(s):  
Social Welfare ◽  
Product Differentiation ◽  
Bargaining Power ◽  
Market Competition ◽  
Input Price ◽  
Downstream Competition ◽  
Decentralized Bargaining ◽  
Downstream Market ◽  
Counterintuitive Result

AbstractIn a vertically related duopoly with input price bargaining, this paper re-examines the downstream firms’ profitability under different market competition degrees. It is shown the rather counterintuitive result that downstream firms earn highest profits with semi-collusion, whose level depends on the upstream bargaining structures, the relative parties’ bargaining power, and the parameters measuring the degree of product differentiation in the downstream market. Concerning social welfare, the key result is that policymakers can tolerate some degree of collusion with decentralized bargaining structures; centralized structures advise for a more procompetitive policy.

Product Differentiation and Location Choice in a Circular City*

2006 ◽  
Vol 46 (2) ◽  
pp. 313-331 ◽  
Author(s):  
Barnali Gupta ◽  
Debashis Pal ◽  
Jyotirmoy Sarkar
Keyword(s):  
Product Differentiation ◽  
Location Choice

Managerial Delegation of Competing Vertical Chains with Vertical Externality

2020 ◽  
Vol 20 (2) ◽  
Author(s):  
Kangsik Choi ◽  
Ki-Dong Lee ◽  
Seonyoung Lim
Keyword(s):  
Cournot Competition ◽  
Incentive Contracts ◽  
Input Price ◽  
Prisoners Dilemma ◽  
Managerial Delegation ◽  
Decentralized Bargaining ◽  
Downstream Market

AbstractWe examine that the bilateral supplier affects the incentive contracts that owners of retailers offer their managers, assuming that the manufacturer sets the input price after observing the terms of the incentive contracts offered to management in the downstream market. Thus, we compare the two models: (1) decentralized bargaining between manufacturers and retailers including two-part tariff contract (2) linear input pricing without bargaining. Contrast to previous studies, we find that in equilibrium, the owners of retailers offer delegation contracts to managers for output restriction regardless of competition modes when offering linear input pricing, which implies that owners do not face a prisoners’ dilemma situation and Pareto superior profit is obtained for retailer. Thus, managerial delegation of retailer is not socially desirable due to the output restriction. Furthermore, decentralized bargaining allows to equalize all the equilibrium outcomes in the different delegation structure under both Bertrand and Cournot competition and leads no delegation for the endogenous delegation problem.

scholarly journals Research on a Cournot–Bertrand Game Model with Relative Profit Maximization

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-12
Author(s):  
Yi-min Huang ◽  
Qiu-xiang Li ◽  
Yan-yan Guo ◽  
Yu-hao Zhang
Keyword(s):  
Dynamic System ◽  
Product Differentiation ◽  
Profit Maximization ◽  
Stable State ◽  
Attraction Domain ◽  
Game Model ◽  
Stable Range ◽  
Adjustment Speed ◽  
Bertrand Game ◽  
Relative Profit

This paper considers a Cournot–Bertrand game model based on the relative profit maximization with bounded rational players. The existence and stability of the Nash equilibrium of the dynamic model are investigated. The influence of product differentiation degree and the adjustment speed on the stability of the dynamic system is discussed. Furthermore, some complex properties and global stability of the dynamic system are explored. The results find that the higher degree of product differentiation enlarges the stable range of the dynamic system, while the higher unit product cost decreases the stable range of price adjustment and increases the one of output adjustment; period cycles and aperiodic oscillation (quasi-period and chaos) occur via period-doubling or Neimark–Sacker bifurcation, and the attraction domain shrinks with the increase of adjustment speed values. By selecting appropriate control parameters, the chaotic system can return to the stable state. The research of this paper is of great significance to the decision-makers’ price decision and quantity decision.

scholarly journals Input Prices and Product Differentiation

2016 ◽  
Vol 16 (3) ◽  
pp. 1611-1619
Author(s):  
Romain Lestage
Keyword(s):  
Product Differentiation ◽  
Vertical Differentiation ◽  
Network Industries ◽  
Input Price ◽  
Vertical Product Differentiation ◽  
Industrial Economics ◽  
Essential Input ◽  
Quality Choice ◽  
The Cost ◽  
Input Prices

Abstract In this paper, we study how input prices affect product differentiation in network industries. In particular, we study whether the principle of vertical differentiation (Choi and Shin 1992, “A Comment on a Model of Vertical Product Differentiation.” The Journal of Industrial Economics 40 (2):229–31; Wauthy 1996, “Quality Choice in Models of Vertical Differentiation.” The Journal of Industrial Economics 44 (3):345–53) remains valid when an entrant purchases an essential input from an incumbent at a regulated price. We find that the higher quality firm always chooses the best available quality, whereas the lower quality firm chooses an intermediate quality, which increases with the input price. If the higher quality firm is the incumbent, a cost-oriented input price maximizes welfare, but comes at the cost of a lower average quality, a higher degree of product differentiation, and therefore stronger downstream market power.

Model Orientasi Kewirausahaan dan Strategi Bisnis Guna Meningkatkan Kinerja Wirausaha Perempuan di Bogor

2021 ◽  
Vol 23 (1) ◽  
pp. 1
Author(s):  
Yuridistya Primadhita ◽  
Eka Avianti Ayuningtyas ◽  
Anggraita Primatami
Keyword(s):  
Path Analysis ◽  
Product Differentiation ◽  
Indirect Effect ◽  
Entrepreneurial Orientation ◽  
Cost Efficiency ◽  
Business Strategy ◽  
Women Entrepreneurs ◽  
Primary Data ◽  
Market Segment ◽  
Differentiation Strategy

Penelitian ini bertujuan untuk menguji pengaruh langsung orientasi kewirausahaan dan strategi bisnis serta pengaruh tidak langsung orientasi kewirausahaan yang dimediasi oleh strategi bisnis terhadap kinerja wirausaha perempuan di Bogor. Penelitian ini menggunakan data primer dari 50 wirausaha perempuan di Bogor. Analisis data dilakukan dengan menggunakan analisis jalur. Hasil penelitian menunjukkan bahwa orientasi kewirausahaan tidak berpengaruh secara langsung terhadap kinerja wirausaha perempuan. Hasil penelitian juga menunjukkan bahwa orientasi kewirausahaan yang dimediasi oleh strategi bisnis berpengaruh lebih besar terhadap peningkatan kinerja wirausaha perempuan. Orientasi kewirausahaan yang kuat diiringi dengan strategi efisiensi biaya, strategi diferensiasi produk, dan strategi segmen pasar spesifik akan memberikan kemungkinan yang lebih besar bagi wirausaha perempuan untuk meningkatkan kinerjanya dan menjadi lebih kompetitif.Kata kunci: kinerja; orientasi kewirausahaan; strategi bisnis; UMKM; wirausaha perempuan             ABSTRACTThis study aims to examine the direct effect of entrepreneurial orientation and business strategy and also the indirect effect of entrepreneurial orientation, mediates by business strategy, on the performance of women entrepreneurs in Bogor. This study used the primary data of 50 women entrepreneurs in Bogor. The data was analyzed using path analysis. The results showed that entrepreneurial orientation has no directly effect on the performance of women entrepreneurs. The results also showed that entrepreneurial orientation that is mediated by business strategy has a greater effect on improving the performance of women entrepreneurs. Strong entrepreneurial orientation that accompanied by cost efficiency strategy, product differentiation strategy, and specific market segment strategy will provide more possibilities for women entrepreneurs to improve their performance and become more competitive.Keywords: business strategy; entrepreneurial orientation; performance; SMEs; women entrepreneurship

Wine Descriptions Provide Information: A Text Analysis

2020 ◽  
Vol 15 (1) ◽  
pp. 71-94 ◽  
Author(s):  
Bryan C. McCannon
Keyword(s):  
Computational Linguistic ◽  
Product Differentiation ◽  
Text Analysis ◽  
The United States ◽  
Limited Information ◽  
Hedonic Price ◽  
New Information ◽  
Experience Good ◽  
Initial Results ◽  
Jel Classifications

AbstractI use a computational linguistic algorithm to measure the topics covered in textual descriptions of wine. I ask whether there is information in the text that consumers value. Wine is a prominent example of an experience good. There is substantial product differentiation in the market, and consumers only have limited information on the utility they will receive when consumed. Thus, information is expected to be valuable. Evaluating descriptions of wine produced across the United States, I use a hedonic price regression to explore whether the descriptions provide any new information not already available to the consumer. Initial results suggest that text descriptions are shown to lose their explanatory value when varietal and numerical ratings are included as controls. I then show that once the varietal, region, and numerical ratings are adequately controlled for, there is information in the descriptions that consumers value. (JEL Classifications: C81, D83, L15)

Vertical Contract and Competition Intensity in Hotelling’s Model

2017 ◽  
Vol 19 (1) ◽  
Author(s):  
Xingtang Wang ◽  
Jie Li ◽  
Leonard F.S. Wang
Keyword(s):  
Social Welfare ◽  
Market Structure ◽  
Product Differentiation ◽  
Bargaining Power ◽  
Spatial Competition ◽  
Equilibrium Outcome ◽  
Competition Intensity ◽  
The Impact ◽  
Downstream Market ◽  
Vertical Market

AbstractThis paper explores the impact of intensity of rivalry in downstream market on the equilibrium locations of the downstream firms under a vertical market structure á la Hotelling. We find that: (i) the presence of upstream firms softens the spatial competition in downstream market; (ii) minimum differentiation cannot be achieved as the equilibrium outcome and the equilibrium product differentiation is insufficient relative to socially optimum; (iii) social welfare is higher with a higher weight attached to intensity of rivalry, which is different from the non-monotonic relationship under the horizontal market case; (iv) the equilibrium product differentiation is independent of bargaining power under the two-part tariff contracts, which is different from Brekke and Straume (2004) under linear pricing.

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