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Author: Christos Constantatos Publisher: ISBN: Category : Barriers to entry (Industrial organization) Languages : en Pages : 0
Book Description
Next we combine our previous results to examine whether an entry threat will induce a multiproduct monopolist to cover any parts of the market he/she would choose to leave unserved in the absence of such threat. We find that there are many cases where the uncovered market result is robust to the threat of entry.
Author: Christos Constantatos Publisher: ISBN: Category : Barriers to entry (Industrial organization) Languages : en Pages : 0
Book Description
Next we combine our previous results to examine whether an entry threat will induce a multiproduct monopolist to cover any parts of the market he/she would choose to leave unserved in the absence of such threat. We find that there are many cases where the uncovered market result is robust to the threat of entry.
Author: Fahri Karakaya Publisher: Praeger ISBN: Category : Business & Economics Languages : en Pages : 230
Book Description
This book provides a comprehensive discussion of market entry barriers in both early and late market entry situations. Barriers in consumer as well as industrial markets are compared, and the advantages of creating as well as overcoming entry barriers are examined. The authors also discuss international market entry barriers and how they can be overcome by presenting actual case histories of successful strategies. The vital role of managerial consensus on market entry in the face of entry barriers is explored, and the book concludes with two Appendices that provide detailed market entry simulation exercises for both domestic and international market entry situations.
Author: John Beath Publisher: Cambridge University Press ISBN: 9780521335522 Category : Business & Economics Languages : en Pages : 220
Book Description
There are few industries in modern market economies that do not manufacture differentiated products. This book provides a systematic explanation and analysis of the widespread prevalence of this important category of products. The authors concentrate on models in which product selection is endogenous. In the first four chapters they consider models that try to predict the level of product differentiation that would emerge in situations of market equilibrium. These market equilibria with differentiated products are characterised and then compared with social welfare optima. Particular attention is paid to the distinction between horizontal and vertical differentiation as well as to the related issues of product quality and durability. This book brings together the most important theoretical contributions to these topics in a succinct and coherent manner. One of its major strengths is the way in which it carefully sets out the basic intuition behind the formal results. It will be useful to advanced undergraduate and graduate students taking courses in industrial economics and microeconomic theory.
Author: Dirk Bergemann Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper analyzes the entry of new products into vertically differentiated markets where an entrant and an incumbent compete in quantities. The value of the new product is initially uncertain and new information is generated through purchases in the market. We derive the (unique) Markov perfect equilibrium of the infinite horizon game under the strong long run average payoff criterion. The qualitative features of the optimal entry strategy are shown to depend exclusively on the relative ranking of established and new products based on current beliefs. Superior products are launched relatively slowly and at high initial prices whereas substitutes for existing products are launched aggressively at low initial prices. The robustness of these results with respect to different model specifications is discussed.
Author: Brandon James Hoffman Publisher: ISBN: Category : Languages : en Pages : 182
Book Description
This is a collection of essays on the topic of vertical markets and resellers. The first two chapters look at the effects of mandatory dealer laws on prices and profits in vertical markets with differentiated goods. The third chapter looks at the quality of products chosen when manufacturers use resellers compared to when they do not. All three chapters show that competition is lessened when mandatory dealer laws exist. Chapter 1 addresses the US automobile market which has laws in almost every state that require sales of new vehicles go through franchised dealers, and manufacturers are not allowed to sell directly to consumers. While vertical markets can provide many benefits to both producer and consumer alike, double-marginalization is often seen as a problem for producers and consumers with vertical markets; whereby firms on different levels both have market power and thus are both able to charge a markup over cost. Contracts and implicit agreements can mitigate or lessen the negative externality associated with double-marginalization, but I develop a model to show that double-marginalization can be a good thing for producers, while simultaneously being bad for consumers. The model has a single dimension on product differentiation and different levels of vertical markets. In this model, firms either sell to consumers or other firms. How far removed the manufacturer of the good is from the final consumer determines the number of vertical markets. A market with one level consists of a manufacturer who sells directly to consumers, while a market with two levels consists of a manufacturer who sells to a reseller who in turn sells to consumers. I find that the profits of the manufacturer of the good can be up to three times as high when there are two levels instead of one and that they will always be at least twice as high. This model also shows that manufacturers can benefit from the existence of a law that requires they use dealers, even though any one single manufacturer has an incentive to not use a dealer. Chapter 2 addresses mandatory dealer laws in a setting without perfectly inelastic demand. Under a certain set of circumstances, manufacturers can earn higher profits after the introduction of these mandatory dealer laws than they would be without them. In this chapter, I remove the perfectly inelastic total demand restriction, and instead show how the elasticity of total demand plays a role in a manufacturer's preference for a mandatory dealer law. For the model used in this paper, I find that total demand does not need to be very inelastic at all, and in fact, can be elastic at the equilibrium prices and quantities. The findings in this paper run contrary to expectation, where double-marginalization is something that hurts manufacture's profits. In chapter 3, I analyze the benefit of moving first in a vertically differentiated market with manufacturers and retailers. Both retailers and manufactures are assumed to be profit-maximizing entities. Here the choice of the incumbent manufacturer creates an indifference between entering with a higher quality or entering with a lower quality for the entering manufacturer. Entry-quality decisions and wholesale pricing are related to the competition of retailers selling the manufacturers product and the degree of consumers' taste for quality. I examine the indifference of the entering manufacturer and highlight the benefits of being able to set quality first as an incumbent manufacturer when pricing stages are simultaneous. Stackelberg competition in the quality stage allows for the possibility for inferior-quality entry as well as superior-quality entry. The first-mover advantage dominates the high-quality advantage in this setting which is consistent with my findings in the dock and boat-lift markets.
Author: Yong-Hwan Noh Publisher: ISBN: Category : Languages : en Pages : 218
Book Description
This dissertation explores models of heterogeneous product markets that rely on the "vertical product differentiation" formulation. The demand structure applied here is the covered-market configuration under the vertical product differentiation. With this specification, product market equilibria of the monopoly and duopoly market are derived. In particular, parameter restrictions on the degree of relative consumer heterogeneity associated with the covered-market setting are identified and used to interpret analytical results. Based on the specified demand structure, I revisit two industrial organization topics from the perspectives of vertical product differentiation. The first essay analyzes the entry of a new product into a vertically differentiated market where an entrant and an incumbent compete in prices. Many models on strategic entry deterrence deal with "limit quantities" as the established firm's strategic tool to deter or accommodate entry. Here, however, the entry-deterrence strategies of the incumbent firm rely on "limit qualities". With a sequential choice of quality, quality-dependent marginal production cost, and a fixed entry cost, I relate the entry-quality decision and the entry-deterrence strategies to the level of an entry cost and the degree of consumer heterogeneity. In particular, the incumbent influences the quality choice of the entrant by choosing its quality level before the entrant. This allows the incumbent to "limit" the entrant's entry decision and quality levels. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well as the incumbent's aggressive entry-deterrence strategies by increasing its quality level towards potential entry. Welfare evaluation confirms that social welfare is not necessarily improved when entry is encouraged rather than deterred. The second essay is motivated by some specific economic questions that have arisen with the introduction of 'genetically modified' (GM) agricultural products. A duopoly market-entry model associated with the vertical product differentiation is developed to show how the existence of segregation costs biases the firm's quality choice behavior. Thus, the key factor of the model is the cost of segregation activities that are necessary to distinguish GM products from non-GM products. With an increasing and convex cost of quality, the model predicts that the entrant firm has an increased incentive to enter the market with a low-quality good to reduce production costs if segregation costs are sufficiently high. When consumers are homogeneous enough, however, entry may occur with the high-quality good.
Author: Christos Constantatos
Author: Christos Constantatos
Author: Fahri Karakaya
Author: Dirk Bergemann
Author: John Beath
Author: Constantatos, Christos
Author: P. Gilbert Geroski
Author: Dirk Bergemann
Author: Brandon James Hoffman
Author: Yong-Hwan Noh
Author: J. T. Valimaki