Does the Potential to Merge Reduce Competition?

We study anticompetitive horizontal mergers in a dynamic model with noisy collusion. At each instant, firms either privately choose output levels or merge to form a monopoly, trading off the benefits of avoiding price wars against the costs of merging. The potential to merge decreases pre-merger collusion, as punishments effected by price wars are weakened. We thus extend the result of Davidson and Deneckere [Davidson C, Deneckere R (1984) Horizontal mergers and collusive behavior. Internat. J. Indust. Organ. 2(2):117–132.], who analyzed the weakening of punishments post-merger, demonstrating that pre-merger collusion is weakened, in a fully stochastic model. Thus, although anticompetitive mergers harm competition ex post, the implication is that barriers and costs of merging due to regulation should be reduced to promote competition exante. This paper was accepted by Tomasz Piskorski, finance.

Porter’s generic strategies for competitive advantage: how they work in selected asian economies

Porter’s generic strategies are important for organizations to gain a competitive edge in their respective market. This is especially true for companies in Asia, the world’s largest continental economy in terms of gross domestic product (GDP) which is also characterized by foreign exchange restrictions, anti-trust laws, and price wars. This paper focuses on the literature on Porter’s generic strategies within the contexts of the three biggest Asian countries (China, Japan, and India). Our review highlights the generic strategies pursued by multinationals in Asia and factors to consider when executing strategic plans in business expansion to the region.

Fine cartels

This paper studies a simple model of a repeated cartel that can punish using both voluntary fines and inefficient prices wars. The idea is to use the fines in response to noisy signals of bad behavior and back it up with threats of price wars in response to the easily observed failure to pay the voluntary fines. The model is shown to deliver the insights of modern repeated game theory in an empirically accurate and tractable form.

AGR Challenge for Bharti Airtel and Vodafone Idea

In 2018, India had 1.2 billion subscribers, and it was the second largest telecommunications market in the world. The industry had witnessed the emergence, ascendency, and dominance of private sector players during the last two decades. The telecom sector was characterized by a growing wireless user base and Internet subscriber base. The dwindling average revenue per user (ARPU) in the mobile telephony segment and the declining average cost to subscriber per GB of data were manifestations of the intense rivalry in the sector which had led to price wars among incumbent players. The Supreme Court of India’s judgement on Adjusted Gross Revenue (AGR) in October 2019 obligated the industry players to pay ₹1,470 billion as payment towards their licence fee and spectrum usage charges. Vodafone Idea and Bharti Airtel, two leading players, collectively owed 60% of the aforementioned liability. Declining revenue had already squeezed the profitability and liquidity of these companies. The AGR liability augmented their challenges.

Determinant Attributes of Store Choice in Organized Retail

Intense competition and price wars in the retail sector provide the impetus to examine consumer behavior in the retail industry. It has become increasingly important to scrutinize what drives consumer choice of retail stores. This chapter addresses this need and aims to establish the factors that drive consumer retail choice behavior. The empirical setting for the study was five organized Indian retail stores: Easy Day, Big Bazaar, More, Reliance Fresh, and Freshmart. Data were collected with the help of a questionnaire (n=700) in a store-intercept survey. Data were analyzed using multivariate data analysis techniques. A model identifying the variables that predicts retail store choice probabilities was developed and tested. Results establish that atmospherics, merchandise assortment, and customer satisfaction have a significant positive impact on retail store choice. On the other hand, price has a significant negative impact on retail store choice. Implications are discussed.

CORPORATE AGGRESSION: A COMPREHENSIVE REVIEW OF PRICE WAR

Purpose: Despite the significance that prices take in companies, it appears that this factor has not researched extensively by academics and marketers. Therefore, this article investigates price war to provide a comprehensive reference about it. Methodology: The researcher has conducted an extensive study of the available relevant literature about the price wars. Marketing research and empirical studies from marketing, industrial organizations and economics has provided the framework for this research. Findings: It is essential to employ appropriate analytic tools for strategic planning of price war. Smart management, along with technical skills, experience and leadership work together for organizational success. Contribution: This study is significant for compiling a wide range of analytical tests and suggesting their appropriate use on right time. This study is helpful for the companies as it has not only provided step by step strategic planning for price wars but has explained when and how to start price wars.