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Mixed Bundling In Duopoly
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Book Synopsis Mixed Bundling in Duopoly by : Nicholas Economides
Download or read book Mixed Bundling in Duopoly written by Nicholas Economides and published by . This book was released on 2008 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present a model where producers of complementary goods have the option to practice mixed bundling. In the first stage of a two-stage game, firms choose between a mixed bundling and a non- bundling strategy. In the second stage, firms choose prices. We show that mixed bundling is a dominant strategy for both firms. However, when the composite goods are not very close substitutes, at the bundling-bundling equilibrium both firms are worse off than when they both commit not to practice mixed bundling.
Book Synopsis Bundling Decisions in a Two-Product Duopoly - Lead Or Follow? by : Zhou Shu
Download or read book Bundling Decisions in a Two-Product Duopoly - Lead Or Follow? written by Zhou Shu and published by . This book was released on 2020 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evaluate the impact of bundling on firms' product and pricing strategies by developing and solving a multi-stage game theoretic model to represent strategic interactions between two competing firms. Each firm is able to produce two homogeneous products and can opt to bundle them together, which may have the dual benefits of providing added value to consumers and reducing marginal costs for manufacturers. One firm (the leader) determines the products offered to sell before the other (the follower), and both then simultaneously set the prices for their products. We demonstrate the existence and uniqueness of the Nash equilibrium for this game, and show that the option to bundle can benefit all competitors simultaneously. When mixed bundling is not an option, we characterize and quantify the leader's advantage in terms of profitability. However, when mixed bundling is an option, the follower may reverse his or her disadvantage in profit by using it as a potential threat. Furthermore, we perform an extensive numerical study to examine the impact of value addition and cost reduction brought by bundling on firms' equilibrium product and pricing strategies and the resulting profits.
Book Synopsis Mixed Bundling in Oligopoly Markets by : Jidong Zhou
Download or read book Mixed Bundling in Oligopoly Markets written by Jidong Zhou and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bundling Under Competition: Duopoly and Oligopoly by : Araz Khodabakhshian
Download or read book Bundling Under Competition: Duopoly and Oligopoly written by Araz Khodabakhshian and published by . This book was released on 2019 with total page 179 pages. Available in PDF, EPUB and Kindle. Book excerpt: In many markets, bundling, or the offering of two or more products in a package for a single price is a common practice. While most markets are competitive, the majority of research work around bundling has focused on monopolistic markets, which are more tractable for analysis. From a monopolist's perspective, bundling has many benefits such as economies of scope, price discrimination, and expansion of demand. However, competition adds an important dimension to bundling decisions and their results. In this dissertation, the aim is to study the implications of competition for firms' product offering, pricing, and bundle design decisions. In the first chapter, we study bundling in a duopoly under price competition and show that bundling can serve as a product differentiation tool and moderate competition even when firms are perfectly identical and offer undifferentiated products. In equilibrium, firms have an asymmetric bundling strategy, i.e., if one firm bundles the other does not. The bundling decision depends on the valuations of customer groups for the two products in the market. However, the firm offering the bundle earns a higher profit. This suggests an inherent first-mover advantage to bundling. There are two factors predicting the success of bundling in a price-competition setting. One is being ahead of the competitor in offering the bundle, and the other is the degree of correlation or its lack in customer valuations of bundle components. In the next chapter, we utilize a quantity competition (Cournot) framework to study the implications of bundling with entry. This model enables the analysis to go beyond duopoly to an oligopolistic market with fixed costs of entry, where firms enter as long as they can recover the fixed cost. We investigate firms' production quantity decisions and profits in equilibrium to determine the number of firms that enter each market. In a two-component setting, we consider examples with two types of offers: a single product, and the product bundled with the other. Then we consider the case of three markets consisting respectively of the first product, the second product, and a matched-quantity bundle of both products. We find that there may not be a unique equilibrium for the number of firms in each market. Moreover, we show that it is possible to construct settings where the number of equilibria can be arbitrarily large. We identify two factors for the success of bundles: one on the demand side and one on the supply side. On the demand side, customers buy bundles as long as both components within the bundle add relatively comparable values to them. On the supply side, firms enter the bundle market if the fixed-cost of entry for the bundle market is lower than the sum of fixed-costs of entry for all components within the bundle by at least a certain amount. We show that these results hold for a single customer group, as well as multiple customer groups. In the last chapter, we study bundle design, which does not seem to be addressed in the literature. We relax the quantity matching assumption common to most bundling research, and allow the firm to choose the ratio of component quantities within the bundle, i.e. \textit{bundle proportion}, so as to maximize profits. We study four market settings: a monopolist with one type of bundle and one customer group, a monopolist with one type of bundle and two customer groups, two bundling firms with the same bundle design and with multiple customer groups, and two bundling firms in competition with potentially different bundling proportions. We conclude that for a monopolist bundler the optimal bundle proportion depends on the satiation consumption levels of the customer. When there is just one customer group in the market, the bundle proportion has a unique global maximum. However, with two customer groups the profit function can have two local maxima and it is possible, though unlikely, to have two optimal bundle proportions. When two bundlers offer potentially independent bundles, in equilibrium, the bundle proportion choices converge. The bundling proportions ratio is a function of the aggregate satiation consumption levels of all customers and is the same for simultaneous as well as sequential entry.
Book Synopsis Essays on Bundling by : Niren Sirohi
Download or read book Essays on Bundling written by Niren Sirohi and published by . This book was released on 1999 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bundling and Economies of Scope by : Antonin Arlandis
Download or read book Bundling and Economies of Scope written by Antonin Arlandis and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how bundling and economies of scope impact competition. We model a duopoly where two firms, produce the two components of a system. We show that firms always have a unilateral incentive to target a discount to consumers who buy the two goods close to the same firm. In our model, the Nash equilibrium is one of mixed bundling. The economies of scope (created by bundling) act to reduce (increase) firms' profits when the market is completely (partially) covered. Moreover, economies of scope act to increase consumer surplus.
Book Synopsis Bundling Telecommunications Services by : Jan Krämer
Download or read book Bundling Telecommunications Services written by Jan Krämer and published by KIT Scientific Publishing. This book was released on 2009 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the advent of digital convergence, incumbent telephone and cable companies have begun to offer their services, such as voice telephony, Internet and TV in so-called triple play packages. While carefully recognizing the technological, legal and economic framework of the fixed-line telecommunications industry, this book investigates whether bundling is indeed a profitable pricing strategy for the firms and if it can possibly facilitate the leverage of market power into neighboring markets.
Book Synopsis Dynamic Mixed Duopoly by : Ramon Casadesus-Masanell
Download or read book Dynamic Mixed Duopoly written by Ramon Casadesus-Masanell and published by Fundacion BBVA. This book was released on 2003 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes a dynamic mixed duopoly in which a profit-maximizing competitor interacts with a competitor that prices at zero (or marginal cost), with the cumulation of output affecting their relative positions over time. The modeling effort is motivated by interactions between Linux, an open-source operating system, and Microsoft's Windows in the computer server segment, and consequently emphasizes demand-side learning effects that generate dynamic scale economies (or network externalities). Analytical characterizations of the equilibrium under such conditions are offered, and some comparative static and welfare effects are examined.
Book Synopsis Competitive Bundling in a Bertrand Duopoly by : Araz Khodabakhshian
Download or read book Competitive Bundling in a Bertrand Duopoly written by Araz Khodabakhshian and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Mixed Duopoly with a Partial-Delegated-Public Firm by : Jie Shuai
Download or read book Mixed Duopoly with a Partial-Delegated-Public Firm written by Jie Shuai and published by . This book was released on 2017 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: We compare the welfare results of mixed duopoly model where a firm can be private, public or partial-delegated-public. We consider two types of partial-delegated-public firms. In partial- delegated-public with location delegation, the firm chooses location to maximize its profit while the social planner chooses price to maximize social surplus. Partial-delegated-public firm with price delegation is the opposite where the firm chooses price to maximize its profit. We find significant differences in equilibrium outcomes both between the two types of partial-delegated- public firms, and between the partial-delegated-public firms and the purely private/public firms. While equilibrium prices in the partial-delegated-public firm cases lie in between those in the pure cases (purely private or purely public), the private firm's profit may be higher when its rival is a partial-delegated-public firm rather than a purely private/public firm. We also find a 'trade-off' within the two partial-delegated-public firm cases: social surplus is higher under location delegation, but consumer surplus and profit of the partial-delegated-public firm are higher under price delegation.
Book Synopsis Market Investigations by : Massimo Motta
Download or read book Market Investigations written by Massimo Motta and published by Cambridge University Press. This book was released on 2022-01-06 with total page 411 pages. Available in PDF, EPUB and Kindle. Book excerpt: In many economic sectors – the digital industries being first and foremost – the market power of dominant firms has been steadily increasing and is rarely challenged by competitors. Existing competition laws and regulations have been unable to make markets more contestable. The book argues that a new competition tool is needed: market investigations. This tool allows authorities to intervene in markets which do not function as they should, due to market features such as network effects, scale economies, switching costs, and behavioural biases. The book explains the role of market investigations, assesses their use in the few jurisdictions where they exist, and discusses how they should be designed. In so doing, it provides an invaluable and timely instrument to both practitioners and academics.
Book Synopsis Price and Quantity Competition in a Unionised Mixed Duopoly by : Kangsik Choi
Download or read book Price and Quantity Competition in a Unionised Mixed Duopoly written by Kangsik Choi and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate a differentiated mixed duopoly in which private and public firms can choose to strategically set prices or quantities when unions are present. For the case of a unionised mixed duopoly, there exists a dominant strategy only for the public firm that chooses Bertrand competition irrespective of whether the goods are substitutes or complements; there is no dominant strategy for a private firm. Thus, we show that regardless of the nature of goods, social welfare under Bertrand competition is always determined in equilibrium, wherein Bertrand competition entails higher social welfare than Cournot competition. Moreover, our main results hold irrespective of the nature of goods, with the exception that when a sufficiently large parameter of complements is employed, the ranking of a private firm's profit is not reversed, which is in contrast to the standard findings.
Book Synopsis Two Essays on Product Bundling and One Essay on Vertical Integration by : Kyonghwa Jeong
Download or read book Two Essays on Product Bundling and One Essay on Vertical Integration written by Kyonghwa Jeong and published by . This book was released on 2006 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Competitive Mixed Bundling and Consumer Surplus by : John Thanassoulis
Download or read book Competitive Mixed Bundling and Consumer Surplus written by John Thanassoulis and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Industrial Organization by : Paul Belleflamme
Download or read book Industrial Organization written by Paul Belleflamme and published by Cambridge University Press. This book was released on 2010-01-07 with total page 725 pages. Available in PDF, EPUB and Kindle. Book excerpt: Industrial Organization: Markets and Strategies provides an up-to-date account of modern industrial organization that blends theory with real-world applications. Written in a clear and accessible style, it acquaints the reader with the most important models for understanding strategies chosen by firms with market power and shows how such firms adapt to different market environments. It covers a wide range of topics including recent developments on product bundling, branding strategies, restrictions in vertical supply relationships, intellectual property protection, and two-sided markets, to name just a few. Models are presented in detail and the main results are summarized as lessons. Formal theory is complemented throughout by real-world cases that show students how it applies to actual organizational settings. The book is accompanied by a website containing a number of additional resources for lecturers and students, including exercises, answers to review questions, case material and slides.
Book Synopsis Mixed Duopoly with Subcontracting by : Jie Shuai
Download or read book Mixed Duopoly with Subcontracting written by Jie Shuai and published by . This book was released on 2018 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: Existing literature on mixed oligopoly focuses on competition among different types of firms but ignores their possible cooperation. We allow cooperation between public firm and private firm through subcontracting in a Hotelling mixed duopoly model. We find that when subcontracting is possible, the equilibrium without subcontracting is not socially optimal since subcontracting can lower total production costs. And if both firms engage in subcontracting, the existence of public firm can guarantee the first best equilibrium, whether it is the low cost firm or not. But when private firm is the low cost firm, it is more profitable for it to choose vertical foreclosure. And the consequent equilibrium is not socially desirable anymore.
Book Synopsis Mixed Duopoly with Product Differentiation by : Toshihiro Matsumura
Download or read book Mixed Duopoly with Product Differentiation written by Toshihiro Matsumura and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the sequential choice of location in a mixed duopoly, where a welfare-maximising public firm competes against a profit-maximising private firm. We examine the desirable role of the public firm in a mixed market. We also consider the effect of price regulation. We find that the public firm should become the follower (leader) if a price regulation is (is not) imposed. We also find that neither price regulation nor privatisation of the public firm improves welfare.
