scholarly journals Price and location equilibria in a circular market: a pure vs a mixed duopsony with a co-operative

2013 ◽  
Vol 59 (No. 8) ◽  
pp. 341-347
Author(s):  
P. Fousekis ◽  
D. Panagiotou
Keyword(s):  
Large Distance ◽  
Price Competition ◽  
Pure Strategy ◽  
Private Firm ◽  
Private Firms ◽  
Market Structures ◽  
Primary Commodity ◽  
Location Equilibrium ◽  
Price War

The objective of the present paper is to analyze the location-price competition in circular markets where the power lies with the buyers. To this end, it considers two alternative market structures. Namely, the pure ones, where the buyers of a primary commodity are private firms, and mixed ones, where a private firm competes against a producer’s co-operative. According to the results, the pure-strategy location equilibrium in both cases involves a distance between the two players larger or equal to 1/4. Nevertheless, the equilibriums are qualitatively different. In the pure duopsony, a large distance is required to prevent a price war while in the mixed duopsony, the private firm tries to stay away from the co-op in order to ensure a strictly positive profit.    

Private firm performance: do women directors matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahnoor Sattar ◽  
Pallab Kumar Biswas ◽  
Helen Roberts
Keyword(s):  
Firm Performance ◽  
Performance Measures ◽  
Small Firm ◽  
Gender Diversity ◽  
Private Firm ◽  
Private Firms ◽  
Women Directors ◽  
Content Type ◽  
Firm Profitability ◽  
Board Gender Diversity

Purpose This paper aims to examine the relationship between board gender diversity and private firm performance. Design/methodology/approach The authors test the association between board gender diversity and private firm performance by estimating pooled multivariate regressions using an unbalanced panel data set of 115,253 firm-year observations. Findings The authors find that younger, less busy and local women directors enhance private firm performance. Firms with 40% or more women directors report triple the economic benefits compared to boards with at least 20% women directors. Considering firm size, women directors significantly increase small firm profitability, and the effect is more pronounced for high-risk firms. Greater board gender diversity enhances small firm performance as the monitoring role of women directors benefits the firm even in the presence of busy men directors. Consistent with the agency theory framework, the authors find that women directors improve small firm profitability in the presence of agency costs. Research limitations/implications Due to the lack of availability of data about private firms, many factors are not directly observable. The analysis uses accounting-based performance measures that may be subject to managerial discretion. Nevertheless, the authors report highly significant results using cash-based performance measures that substantiate the overall findings. Practical implications The results of the present study point to the need for private firms to increase board gender diversity and consider women director busyness, age, nationality and firm size when making board director appointments. Originality/value This study adds to the scarce existent literature investigating private firms. The results contribute to the understanding of gender-diverse boards as well as the attributes of women directors that enhance private firm performance.

scholarly journals Location-Price Game in a Dual-Circle Market with Different Demand Levels

2021 ◽  
Vol 2021 ◽  
pp. 1-15
Author(s):  
Xiaofeng Chen ◽  
Qiankun Song ◽  
Luqing Rong ◽  
Zhenjiang Zhao
Keyword(s):  
Price Competition ◽  
Algebraic Expression ◽  
Market System ◽  
Quartic Equation ◽  
Price Structure ◽  
Price Game ◽  
Spatial Game ◽  
Location Equilibrium ◽  
The Relationship ◽  
Circle Model

This paper researches a location-price game in a dual-circle market system, where two circular markets are interconnected with different demand levels. Based on the Bertrand and Salop models, a double intersecting circle model is established for a dual-circle market system in which two players (firms) develop a spatial game under price competition. By a two-stage (location-then-price) structure and backward induction approach, the existence of price and location equilibrium outcomes is obtained for the location game. Furthermore, by Ferrari method for quartic equation, the location equilibrium is presented by algebraic expression, which directly reflects the relationship between the equilibrium position and the proportion factor of demand levels. Finally, an algorithm is designed to simulate the game process of two players in the dual-circle market and simulation results show that two players almost reach the equilibrium positions obtained by theory, wherever their initial positions are.

scholarly journals A Small Step from Price Competition to Price War: Understanding Causes, Effects and Possible Countermeasures

2016 ◽  
Vol 9 (3) ◽  
pp. 1 ◽  
Author(s):  
Andreas Krämer ◽  
Martin Jung ◽  
Thomas Burgartz
Keyword(s):  
Price Competition ◽  
Capacity Utilization ◽  
Long Distance ◽  
The Public ◽  
Price Wars ◽  
Substantial Risk ◽  
Price War ◽  
Deutsche Bahn ◽  
Multi Method Approach ◽  
Definition Of

<p>The first part of this paper describes the characteristics of price wars, pointing to recent examples that have caused a stir among the public as well as in the respective industries. A new, concise definition of the term price war is suggested. In the second part drivers for price wars are discussed and explained based on behavioral economics (understanding the competitor’s strategy as well as a company’s own cost situation). Particularly in industries that are characterized by a high proportion of costs that are unchangeable in the medium-term and low variable costs there is a substantial risk for unintended price competition possibly ending in a price war. Even slight price reductions can have fatal consequences when decision makers mistakenly estimate the price elasticities too high. In the third part a case study of a price war is presented by focusing on the market of long-distance bus journeys in Germany. Since the market for intercity bus connections was liberalized in 2013, the newly created market segment faces a very strong growth and intensive competition. Using a multi-source-multi-method-approach it is shown how the market entry of UK-based company Megabus affected price levels for bus journeys und initiated competitive reactions of the German railway operator Deutsche Bahn. The interaction of various parameters (low barriers to enter the market; high similarity of products/services; fixation on market share and capacity utilization) leads to a ruinous price competition and leaves few chances for a sustainable profitability. Measures to avoid an impending or to terminate an ongoing price war are presented.</p>

scholarly journals Privatization Policies by National and Regional Governments

2021 ◽  
pp. 2150011
Author(s):  
Francisco Martínez-Sánchez
Keyword(s):  
Public Sector ◽  
Price Competition ◽  
Social Optimum ◽  
Regional Government ◽  
Horizontal Differentiation ◽  
Market Structures ◽  
The Social ◽  
Populated Region ◽  
Privatization Policy ◽  
Regional Governments

In order to analyze the privatization policies undertaken by the national and regional governments, I consider a horizontal differentiation model with price competition in which a country consists of two regions of different sizes. I show that public-sector intervention by either the national or regional government is essential for achieving the social optimum. The preferences of consumers and firms about privatization policy are completely opposite: consumers prefer a regional public-sector intervention, while firms prefer a national public-sector intervention. Finally, I find that the preferences of the two regions about market structures are also opposite: the least populated region prefers the private duopoly, while the most populated region prefers a government intervention in the market.

scholarly journals Strategic Pricing: A Game In Market Economics

2010 ◽  
Vol 8 (6) ◽  
Author(s):  
Tarek H. Selim
Keyword(s):  
Nash Equilibrium ◽  
Price Competition ◽  
Product Price ◽  
Market Outcomes ◽  
Strategic Pricing ◽  
Price Wars ◽  
Quality Product ◽  
Unique Nash Equilibrium ◽  
Bertrand Game ◽  
Price War

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; unicode-bidi: embed; direction: ltr; mso-pagination: none;"><span style="color: black; font-size: 10pt; mso-bidi-language: AR-EG;" lang="EN-GB"><span style="font-family: Times New Roman;">In this paper, game theory is applied to the case of price wars in a market scenario game towards a converging solution of Nash equilibrium. This is done using the famous <span style="mso-bidi-font-style: italic;">Bertrand Game</span>, starting first with a simple version of a game involving two players with undifferentiated products who move simultaneously by merely choosing their prices, and then proceed by extending the market scenario to a <span style="mso-bidi-font-style: italic;">Differentiated Bertrand Game</span>. The market scenario is based on two main rivals. &ldquo;LOCAL&rdquo; player is faced by a lower-priced &ldquo;ASIAN&rdquo; player who has a significantly lower quality product. Price wars dictate market outcomes. Implications of the game reveal interesting, but rather unexpected, results. Specifically, it is shown that resorting to a price war alone is not the optimum choice by the LOCAL player. Rather, the incumbent must not lower his price, even if faced by a lower priced competitor.<span style="mso-spacerun: yes;">&nbsp; </span>This runs in contrast to traditional price war theory. The introduction of lower priced substitutes do not reveal price reduction of the incumbent firm. A unique Nash equilibrium arises when the LOCAL player differentiates his products and charges higher prices compared to the ASIAN player. Consequently, price competition and price wars, when augmented by differentiated aspects of product quality, do not lead to price convergence nor necessarily lead to price reductions over time.</span></span></p>

Ownership Biases and FDI in China: Evidence from Two Provinces

2007 ◽  
Vol 9 (1) ◽  
pp. 1-45 ◽  
Author(s):  
Yasheng Huang
Keyword(s):  
Economic Development ◽  
Empirical Test ◽  
Private Firm ◽  
The Other ◽  
Foreign Firms ◽  
Private Firms ◽  
Growth Opportunities ◽  
Firm Level ◽  
Relative Property ◽  
Future Growth

Jiangsu and Zhejiang are of two of China's most prosperous and dynamic provinces. This paper first presents a factual account of two empirical phenomena: 1) FDI has played a more substantial role in the economic development of Jiangsu than in Zhejiang, and 2) ownership biases against domestic private firms in Jiangsu were more substantial than in Zhejiang. The paper hypothesizes that there is a connection between these two empirical phenomena. Specifically, ownership biases against domestic private firms increase preferences for FDI because FDI provides a measure of relative property rights security. Thus a biased domestic private firm has an incentive to move its assets and/or future growth opportunities to the foreign sector. The paper uses two private-sector surveys—one conducted in 1993 and the other in 2002—to provide an empirical test of this hypothesis. Our analysis shows, controlling for a variety of firm-level attributes and industry and regional characteristics, those private firms which perceive ownership biases to be more severe are more likely to form joint ventures with foreign firms.

A Property Rights Analysis of Newly Private Firms: Opportunities for Owners to Appropriate Rents and Partition Residual Risks

2011 ◽  
Vol 21 (3) ◽  
pp. 445-471 ◽  
Author(s):  
Marguerite Schneider ◽  
Alix Valenti
Keyword(s):  
Property Rights ◽  
Shareholder Value ◽  
Private Firm ◽  
Residual Risk ◽  
Private Firms ◽  
Public Firms ◽  
Going Private ◽  
Key Factor ◽  
Owned Company ◽  
Do So

ABSTRACT:A key factor in the decision to convert a publicly owned company to private status is the expectation that value will be created, providing the firm with rent. These rents have implications regarding the property rights of the firm’s capital-contributing constituencies. We identify and analyze the types of rent associated with the newly private firm. Compared to public firms, going private allows owners the potential to partition part of the residual risk to bond holders and employees, rendering them to be co-residual risk bearers with owners. We propose that new promotion-based contracts with bond holders and employees, reflecting their particular investments, be negotiated as the firm migrates from public to private status. These contracts should acknowledge the firm’s intent to maximize shareholder value and its need to take the risks necessary to do so, but support that the firm’s survival not be undermined due to its possibly opportunistic owners.

Earnings management and performance of management buyouts

2019 ◽  
Vol 45 (10/11) ◽  
pp. 1363-1381
Author(s):  
Lokman Tutuncu
Keyword(s):  
Earnings Management ◽  
Private Equity ◽  
Discretionary Accruals ◽  
Private Firm ◽  
Private Firms ◽  
Cross Sectional ◽  
Content Type ◽  
Management Buyouts ◽  
Firm Management ◽  
And Performance

Purpose The purpose of this paper is to examine the effect of pre-acquisition earnings management on the performance of private firm management buyouts. Design/methodology/approach The study examines 291 UK private firms acquired by their managers between 2004 and 2012. Earnings management is investigated by means of cross-sectional discretionary accruals models, and estimated discretionary accruals are regressed on performance changes in the three years following acquisition. Findings Management buyouts of private firms are preceded by earnings overstatement and followed by performance deterioration. Private equity sponsored firms engage less in earnings management and remain more profitable than non-sponsored buyouts. Upward earnings managers cease to outperform industry after second post-buyout year, while aggressive earnings managers do not outperform industry at all. Discretionary total accruals are inversely associated with performance changes in the three years after buyout, and explain over 4 per cent of the changes in performance. Research limitations/implications Pertinent to the utilisation of private firms and their exemption from publishing cash flow statement, the study relies on accrual-based models for tests of earnings management. Originality/value The paper contributes to the mergers and acquisitions literature and value creation debate in buyouts by providing the first tests of earnings management and post-acquisition performance in private firm management buyouts.

Cournot and Bertrand Competition in a Model of Spatial Price Discrimination with Differentiated Products

2014 ◽  
Vol 14 (1) ◽  
pp. 251-272 ◽  
Author(s):  
Chia-Hung Sun
Keyword(s):  
Price Discrimination ◽  
Price Competition ◽  
Market Competition ◽  
Consumer Surplus ◽  
Social Planner ◽  
Quantity Competition ◽  
Spatial Price Discrimination ◽  
Location Equilibrium ◽  
Spatial Price ◽  
Cournot And Bertrand Competition

AbstractThis study investigates spatial price discrimination with two types of market competition – price competition and quantity competition – and two kinds of cross-relations between goods – substitutes and complements – with endogenous location choices in a barbell model. The results herein present that the maximum differentiation (end point agglomeration) is the unique location equilibrium with substitutes (complements), irrespective of what type of competition. We demonstrate that if the unit transportation rate is sufficiently high, then consumer surplus, profits, and social welfare are higher under price competition than under quantity competition for both substitutes and complements. This means that introducing a spatial barrier to competition generated through transportation costs may solve the problem of inconsistency from the conflict interests between consumers, firms, and a social planner.

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