Downstream rivals’ competition, bargaining, and welfare

Wang, Xingtang; Li, Jie

doi:10.1007/s00712-018-0644-y

Cited by 13 publications

(6 citation statements)

References 24 publications

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“…In this paper, different from Chen et al (2021), we consider input price discrimination, forward and backward cross‐ownership, and analyze the impact of vertical cross‐ownership with input price discrimination in a vertically related market on industry profit, consumer surplus, and social welfare. The inclusion of bargaining process complexes the analysis but makes our framework more realistic and relevant (Buccella & Fanti, 2021; Pinopoulos, 2019, 2021; Wang & Li, 2020). Common belief is that common ownership is more likely to improve welfare when there are fewer downstream firms and a greater degree of product differentiation.…”

Section: Introductionmentioning

confidence: 99%

Vertical cross‐ownership, input price discrimination, and social welfare

Sun

Wang

2022

Int J of Economic Theory

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In this paper, we analyze the impact of vertical cross‐ownership with input price discrimination on social welfare. A higher degree of product differentiation will raise industry profit, consumer surplus, and social welfare; under forward cross‐ownership, a higher degree of cross‐ownership has the same effect, in addition, it will reduce rival firm's profit and increase upstream firm's profit; however, under backward cross‐ownership, a higher degree of cross‐ownership has an opposite effect. Furthermore, under Cournot and Bertrand competition, forward cross‐ownership will incentivize downstream firms to produce more via a lower input price, achieving the above effect.

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Section: Introductionmentioning

confidence: 99%

Vertical cross‐ownership, input price discrimination, and social welfare

Sun

Wang

2022

Int J of Economic Theory

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“…Compared with price competition, the market competition is more intense under quantity competition (Wang & Li, 2020). On the one hand, increasing the managerial delegation coefficient will increase the market share and have a positive impact on firm profit.…”

Section: Analysis Of Resultsmentioning

confidence: 99%

“…The government makes subsidy policies according to the maximization of social welfare. Compared with price competition, quantity competition will lead to more intense market competition (Wang & Li, 2020). Higher government subsidies lead to higher output and lower prices, which leads to higher social welfare.…”

Section: The Expansionmentioning

confidence: 99%

The impact of technology transfer on managerial delegation under vertical product differentiation

Wang

2024

Manage Decis Econ

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This paper analyzes the impact of technology transfer on managerial delegation contracts. Under price competition, if technology transfer occurs, it increases the level of managerial delegation of a firm producing low‐quality product. When the degree of technology transfer is relatively high, technology transfer improves the managerial delegation of producing high‐quality products. When the degree of technology transfer is relatively low, technology transfer reduces the managerial delegation of firms producing high‐quality products. Under quantity competition, technology transfer reduces the managerial delegation coefficient of all firms. We further analyze the Stackelberg competition and the royalty situation.

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“…Finally, the nature of competition and the choice of the payment mechanism in the vertical transaction are also found to drive the results in models that feature a vertical structure 1 . For instance, Wang and Li (2020) consider an upstream monopolist using a two-part tariff and two horizontally differentiated firms to find that consumer surplus and social welfare decrease with the intensity of competition downstream and both are higher under Cournot than under Bertrand. We consider a similar vertical structure and the case of two-part tariffs, although we assume vertical differentiation and the existence of an alternative input source.…”

Section: Literature Reviewmentioning

confidence: 99%

Informal input suppliers, quality choice and welfare

Daga

Mendi

2021

J Econ

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This paper proposes a theoretical model in which a formal upstream firm competes against informal input suppliers, which constitute an alternative, albeit lower-quality input source for formal downstream firms. The existence of an alternative source increases competition in the industry, which tends to be welfare-increasing. However, it may also distort the incentives of the formal upstream firm to invest in quality upgrading. Assuming quantity competition downstream, we analyze how these incentives change and whether the negative welfare effect of a reduced investment by the upstream firm may more than offset the positive welfare effect of increased competition brought about by informal input suppliers. We find that there are parameter values such that this is the case, and welfare decreases if informal input suppliers are present. We analyze the robustness of this result to alternative modeling assumptions, such as price competition downstream and the use of two-part tariffs by the formal upstream firm.

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Downstream rivals’ competition, bargaining, and welfare

Cited by 13 publications

References 24 publications

Vertical cross‐ownership, input price discrimination, and social welfare

Vertical cross‐ownership, input price discrimination, and social welfare

The impact of technology transfer on managerial delegation under vertical product differentiation

Informal input suppliers, quality choice and welfare

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