Shared Manufacturing in A Differentiated Duopoly with Capacity Constraints

This study sets up a differentiated duopoly model considering capacity constraints and shared manufacturing, investigates the equilibrium results, examines the effects of product differentiation and capacity constraints in three scenarios, and compares the equilibrium outcomes in three cases under Cournot and Stackelberg competition. We find that capacity constraints affect the relationships among product differentiation, equilibrium results, and the market share of enterprises. Shared manufacturing impacts the degree of excess capacity, profits, consumer surplus, and social welfare; however, it may sometimes play a negative role in alleviating excess capacity. Moreover, Cournot competition is a better choice for enterprises with capacity constraints compared to Stackelberg competition.

‘New Age’ Preferential Trade Agreements and Global Value Chains: A Comparative Sectoral Analysis

The past three decades witnessed a simultaneous proliferation in the number of preferential trade agreements (PTAs) and the network of global value chains (GVCs). The rise in the number of PTAs has been accompanied by inclusion of ‘deeper’ provisions such as services, competition, intellectual property rights (IPR), etc. This study aims to explain the differential impact PTA ‘depth’ on trade in value added as well as the heterogeneous results observed across industries based on their distinctive characteristics. For this purpose, an augmented gravity equation with three-way fixed effects is estimated, using a relatively newer dataset for the time period 2000-2015 for 64 countries. The results conclude that the PTA ‘depth’ determined by nontariff and ‘behind-the-border’ provisions leads to greater participation of member countries in GVCs. Furthermore, it is shown that value added trade for a sector like automotive, which has higher product differentiation, intra-industry trade, IPR and FDI linkages is most impacted by the PTA ‘depth’.

The Dynamics of Product Development in Software Startups

Software startups are increasingly under high pressure to deliver successful products to survive and thrive in the modern highly competitive technology market. Larger organizations with deep pockets can replicate the same business ideas used by startups with relative ease. So how does the average startup stand a chance at succeeding at this seemingly David vs. Goliath contest? This article looks at the available literature and identifies such factors that can affect the success of software development startups. Using causal loop constructs from the field of system dynamics, the interactions among the various identified factors are visualised to reveal the dynamics of the system. The result is as a three-dimensional view of success factors in form of time, capital and (product) differentiation. The modelled system is then simulated, and the resultant trend is reviewed and interpreted. This research acts as ground work for analysing the workings of software development startups and sets the stage for a more holistic study of the area, upon which further research can be carried out.

Downstream competition and profits under different input price bargaining structures

In 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.

An Overview of Higher Order Frequency Applications in Communication Systems

The principal reason for focusing on the higher band is the huge amount of allocated bandwidth around 60 GHz, which can be used to accommodate all kinds of short-range (< 1 km) wireless communication. In addition, 60 GHz front-end technology is emerging rapidly. In order to exploit the 60 GHz band efficiently, an overall network architecture should be worked out that gives the industry wide scope for product differentiation and 60 GHz system design should evolve guiding criteria such as affordability, modularity, scalability, expandability, interoperability and ergonomics.

Product differentiation and populistic entry strategies in a mortgage market with Bertrand competition

PurposeThe purpose of this paper is to analyse the interaction between a profit maximising mortgagor and a newcomer to a mortgage market with Bertrand competition where the newcomer has a populistic entry strategy and undercuts mortgage market rates. The intention of the paper is to relate the populistic entry strategy to mortgage market characteristics and the strategic market position of both the established mortgagor and the newcomer in question.Design/methodology/approachThe paper analyses a mortgage market by combining the behaviour of a profit maximising mortgagor with that of a newcomer to the mortgage market which has a populistic entry strategy and does not maximise profits. The short-run market solution provides comparative statics on the strategic market position of both the established mortgagor and the newcomer to the mortgage market during the entry phase both related to product differentiation and to price mirroring and undercutting of mortgage rates.FindingsThe model finds a mortgage market solution where a lower mortgage rate helps the newcomer gain a customer base. As the newcomer's strategy to mirror prices makes it unable to pass-through funding cost to its mortgage rate, the strategy is unsustainable over time. The established mortgagor has a strategically beneficial position as the mortgage market rates only relate to its funding cost. Unless the newcomer has a funding cost advantage, the established mortgagor has a higher interest rate margin. Differentiation impacts the newcomers’ interest rate margin positively. If the newcomer lacks a funding cost advantage, there is a critical mirroring rate that ensures it a higher interest rate margin. The higher the newcomers’ own funding cost, the higher is the upper bound for price mirroring, relating market entry to a small undercutting of mortgage rates and a mortgage market with weak competition. The funding cost of the established mortgagor pulls pricing in the opposite direction, allowing for a lower mirroring rate and tougher mortgage market competition during entry.Originality/valueThe paper aims to contribute to the understanding of market equilibrium in the absence of profit maximising behaviour. Framing a mortgage market in terms of a duopoly where a newcomer enters with a populistic entry strategy offering a lower mortgage rate and a mortgage product with a different loan-to-value (LTV) ratio, a novel mortgage market case comes about. The populistic entry strategy produces an augmented reaction curve, crucial for the mortgage market rates.

EXPRESS: Effective Sme Import Strategy: Its Drivers, Moderators, and Outcomes

We propose a conceptual model of the drivers, moderators, and outcomes of a firm’s effective import strategy, anchored on the Dynamic Capabilities and Industrial Organization theories. While the former theory explains the mechanism through which dynamic capabilities facilitate import strategy effectiveness that boosts competitive advantage and ultimately enhances financial performance, the latter theory sets the foundation for explaining the contingency role of both competitive intensity and environmental uncertainty on translating effective import strategy into competitive advantage. The model was tested using a sample of 151 British importers of small-to-medium size, with results indicating that possession of high levels of certain dynamic capabilities of a generic (i.e., adaptive and entrepreneurial) and import-specific (i.e., source identification and market development) nature are conducive to import strategy effectiveness. The latter was found to generate both product-differentiation advantage and low-cost advantage, although this was contingent on the degree of competitive intensity and environmental uncertainty prevailing in the importer’s home market. Finally, it was confirmed that both product-differentiation advantage and low-cost advantage have a favorable impact on the importer’s financial performance.