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Author: Kosin Isariyawongse Publisher: ISBN: Category : Oligopolies Languages : en Pages : 204
Book Description
This dissertation addresses issues of strategic behavior of firms in oligopoly markets. In the first study we analyze how generic advertising affects brand advertising and firm profits in differentiated oligopoly markets. We develop two models, one with vertical differentiation and another with horizontal differentiation. In the case of vertical differentiation, we amend Crespi's (2007) model to show that only the high quality firm will use brand advertising. We also show that when differentiation is horizontal, the equilibrium is likely to be more symmetric in terms of each firm's profits, spending on brand advertising, and response to generic advertising. We also demonstrate that generic advertising will increase expenditures on brand advertising when firms play a supermodular game. In the second study, we analyze the interaction between generic advertising, brand advertising, and firm profits when products are differentiated either vertically or horizontally and brand advertising is purely informative. That is, brand advertising lowers consumer search costs of identifying brand characteristics. The model demonstrates that firms can benefit from investing in brand advertising that lowers consumer search costs as well as from brand advertising that is purely persuasive. In addition, the results demonstrate that whether brand advertising is persuasive or informative, the outcome is more likely to be symmetric with horizontal differentiation than with vertical differentiation. This study shows that brand advertising is a strategic complement when persuasive and a strategic substitute when informative. In the third study, we allow the choice of strategic variable, output and price, to be endogenous to the firm. We consider the case where one firm chooses output and the other firm chooses price, which we call a Cournot-Bertrand model. We provide a real world example of this "Cournot-Bertrand" behavior and show that the outcome can be a Nash equilibrium. Allowing the timing of play (early or late) as well as the strategic variable (output or price) to be endogenous, we demonstrate an outcome where one firm competes in output and the other firm competes in price can be a subgame perfect Nash equilibrium.
Author: Kosin Isariyawongse Publisher: ISBN: Category : Oligopolies Languages : en Pages : 204
Book Description
This dissertation addresses issues of strategic behavior of firms in oligopoly markets. In the first study we analyze how generic advertising affects brand advertising and firm profits in differentiated oligopoly markets. We develop two models, one with vertical differentiation and another with horizontal differentiation. In the case of vertical differentiation, we amend Crespi's (2007) model to show that only the high quality firm will use brand advertising. We also show that when differentiation is horizontal, the equilibrium is likely to be more symmetric in terms of each firm's profits, spending on brand advertising, and response to generic advertising. We also demonstrate that generic advertising will increase expenditures on brand advertising when firms play a supermodular game. In the second study, we analyze the interaction between generic advertising, brand advertising, and firm profits when products are differentiated either vertically or horizontally and brand advertising is purely informative. That is, brand advertising lowers consumer search costs of identifying brand characteristics. The model demonstrates that firms can benefit from investing in brand advertising that lowers consumer search costs as well as from brand advertising that is purely persuasive. In addition, the results demonstrate that whether brand advertising is persuasive or informative, the outcome is more likely to be symmetric with horizontal differentiation than with vertical differentiation. This study shows that brand advertising is a strategic complement when persuasive and a strategic substitute when informative. In the third study, we allow the choice of strategic variable, output and price, to be endogenous to the firm. We consider the case where one firm chooses output and the other firm chooses price, which we call a Cournot-Bertrand model. We provide a real world example of this "Cournot-Bertrand" behavior and show that the outcome can be a Nash equilibrium. Allowing the timing of play (early or late) as well as the strategic variable (output or price) to be endogenous, we demonstrate an outcome where one firm competes in output and the other firm competes in price can be a subgame perfect Nash equilibrium.
Author: Artak Meloyan Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This dissertation consists of two chapters that try to examine the structural behaviour of firms with market power in two contexts: implicit collusion and merger. In the first chapter, we examine the implicit collusion in the U.S. corn seed market where several firms dominate the market and try to grasp consumer welfare. In these types of markets, firms can implicitly divide the market among each other and in each of these submarkets gain market power by offering different products than their competitors. Thus, the implicit collusion can potentially increase their market power. We show the difference in SPNE of implicit collusion between duopoly and oligopoly and examine whether or not there is evidence of implicit collusion in setting prices or product lines in the case of oligopoly. Results indicate that there is significant collusion in not only price setting stage, but also in product line choosing stage. The second chapter evaluates the impact of mergers on market prices through two different channels: efficiency gain vs. market concentration. We develop a theoretical model for firm's merger behavior, derive the equilibrium market prices both before and after the merger and decompose the total price change into two components: those due to the efficiency gain and those due to the market concentration. Then we apply the model to the case of a merger in mayonnaise market in 2015 to conduct empirical analyses using price-quantity data in the U.S. mayo market from 2013 to 2017. Results show a negative relationship between efficiency gain and market prices and positive relationship between market concentration and market prices. However, the efficiency gain effect outweighs the market concentration effect in the mayonnaise industry which leads to price decrease as a result of the merger.
Author: Andreas Wellmann Publisher: GRIN Verlag ISBN: 3638255948 Category : Business & Economics Languages : en Pages : 17
Book Description
Essay from the year 2004 in the subject Economics - Micro-economics, grade: 72%, University of Bradford (-), course: Micro-Economics, language: English, abstract: The phrase oligopoly is derived from the Greek language and means “few sellers”. Sloman & Sutcliffe (2001) defines an oligopoly as a type of imperfect market in which a ‘few firms between them share a large proportion of the industry.’ (p.236). Thus, industries like oligopolies are dominated by a small number of manufacturers that may produce either differentiated or nearly identical products. It is necessary to distinguish between two types of oligopoly structures. Therefore Harrison, Smith & Davies (1992) suggests the distinction between perfect oligopoly and imperfect oligopoly. Perfect oligopolies feature market players that produce nearly identical products such as sugar or CD’s whereas imperfect oligopolies distinguish themselves by differentiated products like cars or airplanes. [...]
Author: Malgorzata Knauff Publisher: Presses univ. de Louvain ISBN: 9782874630118 Category : Business & Economics Languages : en Pages : 168
Book Description
The thesis consists of five chapters. The first of them contains introduction. Chapter 2 considers a broad class of two player symmetric games, which display a fundamental non-concavity when actions of both players are about to be the same. This implies that no symmetric equilibrium is possible. We distinguish different properties of the payoff functions, like strategic substitutes, complements and quasi-concavity, which are not necessarily imposed globally on the joint action space. A number of applications from industrial organization and applied microeconomics literature are provided. In Chapter 3 we generalize to the extent possible the known results for the case of games with one-dimensional action sets to the general case of games with action spaces that are complete lattices. We find that in the general case the scope for asymmetric equilibrium behavior is definitely broader than in the one-dimensional case, though still quite limited. Moreover, we investigate under which sufficient conditions asymmetric pure strategy Nash equilibria are always Pareto dominated by symmetric pure strategy Nash equilibria. In Chapter 4 we deal with the effects of market transparency on prices in the Bertrand duopoly model. We consider two types of strategic interaction between firms in an industry - strategic complementarities and substitutabilities. In the first case, the results are close to conventional wisdom, especially, when in the same time products are substitutes. Namely, equilibrium prices and profits are always decreasing in transparency level, while the consumer’s surplus is increasing. Considering price competition with strategic substitutes, an ambiguity in the direction of change of prices appears. This leads to ambiguity concerning equilibrium profits and surplus changes caused by increasing transparency. In Chapter 5 we provide general conditions for Cournot oligopoly with product differentiation to have monotonic reaction correspondences. We give a proof for the conditions stated by Vives (1999). Moreover we elaborate more general requirements. They allow for identifying increasing best responses even in case inverse demand is submodular, and similarly, decreasing best responses in case of supermodular inverse demand. Examples illustrating the scope of applicability of these results are provided.
Author: Kosin Isariyawongse
Author: Kosin Isariyawongse
Author: Artak Meloyan
Author: Alexander Steinmetz
Author: Sihong Zhang
Author: Phillip Swagel
Author: Alexei Boulatov
Author: Steven Lawrence Puller
Author: Andreas Wellmann
Author: Patrick Munro Emerson
Author: Malgorzata Knauff