Author: Silviano Esteve PérezPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Three Essays on Strategic Competition and Exit
Author: Silviano Esteve PérezThree Essays in Competitive Strategy
Author: Johannes Konstantin SchmalzPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Three Essays in Real Options
Author: Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Real options refer to the investment, entry, exit and other strategic decisions of the firm that share three important characteristics: they are irreversible, they are made under uncertainty, and their timing is chosen by the firm. The term `real options' was introduced in 1977 by Stewart Myers in his paper `Determinants of corporate borrowing' that related risky debt holdings to the future investment policy of the firm. The literature on real options has since been active and growing with seminal works by Brennan and Schwartz (1985) on the valuation and optimal timing of the natural resource investments; McDonald and Siegel (1986) on general approach to investment timing and scrapping; Margrabe (1978) on the asset exchange options; Fudenberg and Tirole (1985) on the preemption and equilibrium in the technology adoption games; Pindyck (1988) on capacity choice, and Kulatilaka and Perotti (1998) on strategic growth options under imperfect competition. In the 1990's and 2000's, a number of classical textbooks in real options appeared in print: Dixit and Pindyck (1994), Trigeorgis (1996), Amram and Kulatilaka (1998), and Vollert (2003). In its development the real options literature combines the option pricing framework introduced in Black and Scholes (1973) and Merton (1973) with the research in the specific fields of economics and finance such as capital budgeting and investment policy, corporate debt and agency problems, mergers & acquisitions or game theory. The present work illustrates the application of the real options approach to three economic areas: strategic competition, mergers & acquisitions and international trade. The first chapter discusses the optimal timing of the technology adoption, entry and merger decisions in the industry producing a vertically differentiated product. I solve the model for the monopoly, duopoly and merger (which is equivalent to a monopoly with two products) and outline the equilibrium strategies of the Incumbent and the Entrant.
Three Essays on Creative Destruction
Author: Mitsuru IgamiPublisher:
ISBN:
Category : Creative ability in business
Languages : en
Pages : 142
Book Description
This dissertation aims to advance our knowledge of long-run economic changes. It consists of three essays on strategic industry dynamics in retail services, agricultural commodities, and high-tech manufacturing, respectively. Although creative destruction is commonly understood as the replacement of old technologies by new ones, its true significance lies not in the transition of technologies per se but in either the reluctance or inability of old winners to innovate when faced with new challengers. Hence I emphasize the incumbent-entrant rivalry as the common theme across these essays. Essay 1 assesses the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the conventional notion that big stores drive small rivals out of the market, data from Tokyo in the 1990s show that large supermarkets' entry induces the exit of existing large and medium-size competitors, but improves the survival rate of small supermarkets. These findings highlight the role of store size as an important dimension of product differentiation and caution against size-based entry regulations. Essay 2 studies the impact of international market structure on commodity prices, using a standard oligopoly model and exploiting historical variations in the structure of the international coffee bean market. The results suggest that, of the 75% drop in the real coffee price between 1988 and 2001, the end of a cartel treaty explains 49 points and the emergence of Vietnam as a major exporter explains another 9 points. I then discuss policy implications for competition, trade, and aid. Essay 3 investigates why incumbent firms innovate more slowly than entrants. Theories predict cannibalization between existing and new products delays incumbents' innovation, whereas preemptive motives accelerate it, and incumbents' cost (dis)advantage would further reinforce these tendencies. To empirically quantify these three forces, I develop and estimate a dynamic oligopoly model using a unique panel dataset of hard disk drive (HDD) manufacturers (1981-98). The results suggest that despite strong preemptive motives and a substantial cost advantage over entrants, incumbents are reluctant to innovate because of cannibalization, which can explain at least 51% of the incumbent-entrant timing gap. I then discuss managerial and public-policy implications.
Three Essays on Competition and Innovation
Author: Daniel NepelskiThree Essays on Competition Under Uncertainty
Author: Jongwoo ParkPublisher:
ISBN: 9781124734514
Category : Competition
Languages : en
Pages : 81
Book Description
Essays on Market Competition
Author: Mushegh HarutyunyanPublisher:
ISBN:
Category : Electronic dissertations
Languages : en
Pages : 166
Book Description
My dissertation consists of three chapters in each of which I analyze how specific phenomena affect market competition and the firms' strategic decisions. Below I briefly describe the findings of each chapter. The first chapter analyzes a situation where a firm's customers learn some unanticipated or hidden use value of the firm's product whereas the non-customers remain uninformed about that extra value. Should the firm advertise and inform all consumers about its product's hidden value? A monopolist will benefit from advertising its product's hidden value. However, our analysis reveals that this may not be true when the firm faces competition in the market--the firm may actually make higher profits if it keeps its hidden value secret from its competitor's customers even if advertising to inform those customers is costless. Not advertising the product's hidden value creates an incentive for both firms to continue targeting their own existing customers rather than poaching each other's customers. This can alleviate price competition and increase both firms' profits even when firms anticipate the hidden value and compete more aggressively for customers in the early period. Our research suggests that firms can benefit from an "under-promise and over- deliver" strategy if they refrain from communicating their extra value to the competitor's customers. Moreover, we find that positive word of mouth about a firm's product will not necessarily benefit the firm and can in fact make all firms worse off. The second chapter of the dissertation challenges the conventional wisdom that firms will always benefit from reduced competition if their competitor exits the market or has a weakened product offering. We show that in a channel setting such intuition may not be true, and a manufacturer and its retailer can actually become worse off if the competing manufacturer exits the market (e.g., because of idiosyncratic shocks in its supply-side factors). Put differently, more intense market competition can be an all-win for the manufacturers, the retailers, and the consumers. Intuitively, although the competitor's exit will alleviate price competition for the surviving manufacturer and retailer, it will also worsen the double-marginalization problem within the surviving manufacturer's channel, leading to lower profits for the surviving manufacturer despite an increase in its wholesale price. The retailer may also become worse off because its benefit from alleviated competition may not be enough to compensate for the increased wholesale price. Moreover, we find that the manufacturer may benefit when the competitor's product quality increases, i.e., a firm may prefer a stronger rather than a weak enemy. In the third chapter, we investigate the competitive implications of some consumers' concerns for price fairness--a phenomenon that has been well-documented in the behavioral literature. We analyze a market where a fraction of consumers have fairness concerns, and their fairness perceptions are formed by comparing the competing firms' price markups--if a firm charges a higher markup than its competitor, then "fair-minded" consumers will tend to perceive the firm as unfair and be less willing to purchase the firm's product. One might think that the existence of fair-minded consumers would induce the firms to reduce their prices, decreasing their profits and increasing consumers' surplus. Contrary to this conventional wisdom, our analysis reveals that having a segment of fair-minded consumers in the market has a non-monotonic effect on the firms' profits. More specifically, if the fraction of consumers having fairness concerns is small, consumers' fairness concerns can actually alleviate price competition, making firms better off and consumers worse off. Within that range, an increase in the fraction of fair-minded consumers can increase the firms' profits and reduce the consumers' surplus. But when the fraction of fair-minded consumers is sufficiently high, the firms will compete more aggressively, in which case consumers' fairness concerns will benefit consumers and reduce the firms' profits.
Three Essays on Market Conditions and Firms' Behaviors in an Imperfectly Competitive Industry
Author: Zhuang MiaoPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
"This thesis studies how firms in an imperfectly competitive industry adjust their market strategies (such as prices, product quality, and exporting decisions) in response to varying market conditions. The first chapter develops a theoretical model on how firms decide on their product scope (the number of product varieties offered by the firms) in response to varying trade costs (such as transportation distances, exchange rate volatility, and tariff rates). The model predicts that firms export fewer varieties to destinations that are farther away from the home country, or that are subject to higher tariff rate or greater exchange rate volatility. The predictions of the model are tested by employing the Chinese firm-level data from the years 2001 and 2006. The second chapter is a theoretical model of an oligopoly producing vertically differentiated goods, where firms compete in quantities. I consider several alternative specifications of how set-up costs as well as variable costs differ across the chosen quality levels. The chapter focuses on the long run equilibrium, where the long run equilibrium number of firms is determined by the zero-profit condition implied by free entry and exit. The model determines conditions under which all firms produce both high-quality and low-quality variety and studies the effect of an expansion of market size on the quality levels and prices, and on the average price and average quality. An empirical test of a version of the model is carried out, using Chinese firm-level data. The third chapter studies a short-run duopoly model where firms may choose to specialize in different quality levels while competing in quantities rather than in prices. In stage one, firms choose their quality levels, and in stage two, they compete in quantities. The equilibrium prices of high-quality and low-quality goods emerge as outcome of the competition in quantities. This is in contrast to the mainstream literature on duopolies with vertical quality differentiation, which assume that firms set prices. The model is used to study how changes in income inequality affects the equilibrium qualities and prices." --
Three Essays on Strategic Aspects of International Trade
Author: Jee-Hyeong ParkThree Essays on Imperfect Competition[
Author: Adina Oana ClaiciPublisher:
ISBN: 9788468965215
Category :
Languages : en
Pages : 250
Book Description