From Mad Men to Maths Men: Concentration and Buyer Power in Online Advertising

This paper analyzes the impact of intermediary concentration on the allocation of revenue in online platforms. We study sponsored search documenting how advertisers increasingly bid through a handful of specialized intermediaries. This enhances automated bidding and data pooling, but lessens competition whenever the intermediary represents competing advertisers. Using data on nearly 40 million Google keyword auctions, we first apply machine learning algorithms to cluster keywords into thematic groups serving as relevant markets. Using an instrumental variable strategy, we estimate a decline in the platform’s revenue of approximately 11 percent due to the average rise in concentration associated with intermediary merger and acquisition activity. (JEL C45, D44, G34, L13, L81, M37)

THE COMPETITIVENESS ANALYSIS OF EDIBLE BIRD NEST INDUSTRY IN MALAYSIA: APPLYING PORTER'S FIVE FORCE

The demand for EBN is continuous to growth and about 70 percent of world demand still cannot be fulfilled. Unfortunately, Malaysia only contributes 20 percent from world demand. The aims for this industry are to contribute about RM5 billion to Malaysian agricultural export and to achieve at least 40 percent of world demand. As being one of the most demanded EBN and being in the competition for leadership in world bird nest market, it can be specified that new market entrants and investments are important to fulfil the aims of government to this industry and for the growth of EBN industry. Thus, the objectives of this paper are to analysing the current competition condition of EBN industry in Malaysia and its opportunities for new entrants. This study revealed that the need of a huge capital and knowledge to conduct this business is essential and must come together. There is relatively low threat of substitution if the business premise is a shop lot. Despite the existence of buyer power in price negotiations, swiftlet house owners too could influence the process and assure themselves of higher markups when they organise a tender process with the help of the rancher’s association. Threat of rivalry is low especially with the setup of the rancher’s association to help each member who faced problems.

Disentangling performance outcomes of a firm’s innovativeness: A resource-advantage perspective

Inconsistent findings from the literature suggest that the relationship between innovativeness and performance is more complex than it might be presumed. By drawing on the resource-advantage theory, in this study we investigate: 1) the moderating effect of buyer power and competitive rivalry, and 2) the mediating role of customer- and competitor-based positional advantage on the relationship between innovativeness and sales-based and profit-based performance. The findings from the survey on 132 medium- and large-sized industrial firms in Croatia show that buyer power and competitive rivalry positively moderate the relationship between innovativeness and performance outcomes. Moreover, it was found that customer- and competitor-focused positional advantages mediate the link between innovativeness and performance outcomes. The findings of this study contribute to the literature and management practice by shedding new light on the nature of innovativeness in industrial firms.

Supply Chain Competition: A Market Game Approach

We study supply chains where multiple suppliers sell to multiple retailers through a wholesale market. In practice, we often observe that both suppliers and retailers tend to influence the wholesale market price that retailers pay to suppliers. However, existing models of supply chain competition do not capture retailers’ influence on the wholesale price (i.e., buyer power) and show that the wholesale price and the order quantity per retailer do not change with the number of retailers. To overcome this limitation, we develop a competition model based on the market game mechanism in which the wholesale price is determined based on both suppliers’ and retailers’ decisions. When taking into account retailers’ buyer power, we obtain the result that is consistent with the observed practice: As the number of retailers increases, each retailer’s buyer power decreases, and each retailer is willing to pay more for her order, so the wholesale price increases. In this case, supply chain expansion to include more retailers (or suppliers) turns out to be more beneficial in terms of supply chain efficiency than what the prior literature shows without considering buyer power. Finally, we analyze the integration of two local supply chains and show that although the profit of the integrated supply chain is greater than the sum of total profits of local supply chains, integration may reduce the total profit of firms in a retailer-oriented supply chain that has more retailers than suppliers. This paper was accepted by Charles Corbett, operations management.