Quality-improving alliances in differentiated oligopoly

Deroı̈an, Frédéric; Gannon, Frédéric

doi:10.1016/j.ijindorg.2005.09.006

Cited by 48 publications

(30 citation statements)

References 15 publications

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“…In particular, the intensity of the hold-up problem faced by linked firms is reduced by competing trade unions under decentralisation, while it is reduced by the uniformity rule under centralisation (Mukherjee and Pennings, 2011). 6 As it turns out, competition between decentralised unions -in line with Mukherjee and Pennings (2011) -implies a more effective mechanism in mitigating the hold-up problem, and thus, it encourages the creation of more links between firms.…”

Section: Introductionmentioning

confidence: 94%

Wage‐Setting Institutions and R&D Collaboration Networks

Ferrett

Zikos

2013

Australian Economic Papers

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We analyse how union structures that differ in the degree of wage-setting centralisation affect the pattern of R&D network formation. Within the context of a three-firm industry, a central union that sets a uniform wage is shown to induce a partial R&D network that includes two firms but excludes the third. In contrast, we find that, under less centralised union structures, firms have incentives to form R&D networks with a larger number of alliances. This result is consistent with the stylised facts for industrialised countries: recent decades have seen an upsurge in R&D alliances along with labour market deregulation towards more flexible wage-setting institutions.

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Section: Introductionmentioning

confidence: 94%

Wage‐Setting Institutions and R&D Collaboration Networks

Ferrett

Zikos

2013

Australian Economic Papers

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“…To sum up, equation (31) entails that the proverb "an enemy of my enemy is my friend"applies to our setting. This echoes the paper by Arie et al (2015) who show that, if two small firms serve two separate markets and a large firm serves both these markets, then, under Bertrand competition, a merger is profitable for each of the small firms.…”

Section: [2]mentioning

confidence: 99%

Price Competition in Product Variety Networks

Ushchev¹,

Zénou

2016

SSRN Journal

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We develop a product-differentiated model where the product space is a network defined as a set of varieties (nodes) linked by their degrees of substituability (edges). We also locate consumers into this network, so that the location of each consumer (node) corresponds to her "ideal" variety. We show that, even though prices need not to be strategic complements, there exists a unique Nash equilibrium in the price game among firms. Equilibrium prices are determined by both firms' sign-alternating Bonacich centralities and the average willingness to pay across consumers. They both hinge on the network structure of the firm-product space. We also investigate how local product differentiation and the spatial discount factor affect the equilibrium prices. We show that these effects non-trivially depend on the network structure. In particular, we find that, in a star-shaped network, the firm located in the star node does not always enjoy higher monopoly power than the peripheral firms.

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“…the so-called first copy costs of this 'stage-two'-software. See also footnote 4, p 8 6 On p 633 Deroian and Gannon (2006) provide a revenue function based on the utility…”

Section: Stage Two: Quantity Decisionsmentioning

confidence: 99%

“…There are two approaches: One version was proposed by Sutton (1997, p 618) and used e.g. by Symeonidis (2003) or Deroian and Gannon (2006):…”

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confidence: 99%

Quality Competition or Quality Cooperation? License-Type and the Strategic Nature of Open Source vs. Closed Source Business Models

Engelhardt¹

2010

SSRN Journal

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In the ICT sector, product-software is an important factor for the quality of the products (e.g. cell phones). In this context, open source software enables firms to avoid quality competition as they can cooperate on quality without an explicit contract. The economics of open source (OS) versus closed source (CS) business models are analyzed in a general two-stage model that combines aspects of noncooperative R&D with the theory of differentiated oligopolies: In stage one, firms develop software, either as OS or CS, or as a an OS-CS-mix if the license allows. In stage two, firms bundle this with complementary products and compete à la Cournot. The model allows for horizontal product differentiation in stage two. The finding are: 1.) While CS-decisions are always strategic substitutes, OS-decisions can be strategic complements. Furthermore, CS is a strategic substitute to OS and vice versa. 2.) The type of OS-license plays a crucial role: only if the license prohibits a direct OS-CS code mix (like the GPL), then Nash-equilibria with firms producing OS code exist for all parameters. 3.) In the equilibrium of a mixed industry with restricted licenses, OS-firms offer lower quality than their CS-rivals.

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Quality-improving alliances in differentiated oligopoly

Cited by 48 publications

References 15 publications

Wage‐Setting Institutions and R&D Collaboration Networks

Wage‐Setting Institutions and R&D Collaboration Networks

Price Competition in Product Variety Networks

Quality Competition or Quality Cooperation? License-Type and the Strategic Nature of Open Source vs. Closed Source Business Models

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