Search results for "Product differentiation"
showing 10 items of 20 documents
Monitoring and Market Power in Loan Markets
2000
Whether or not banks are engaged in ex ante monitoring of customers may have important consequences for the whole economy. We approach this question via a model in which banks can invest in either information acquisition or market power (product differentiation). The two alternatives generate different predictions, which are tested using panel data on Finnish local banks. We find evidence that banks’ investments in branch networks and human capital (personnel) contribute to information acquisition but not to market power. We also find that managing customers’ money transactions enhances banks ability to control their lending risks.
Accelerated internationalisation: evidence from a late investor country
2006
PurposeRecent studies are trying to adapt the explanation of the internationalisation process to new environmental conditions. This paper aims to offer evidence of the existence of a group of firms that use a speeded‐up internationalisation process.Design/methodology/approachCluster analysis and logit regressions are used on a sample of 271 Spanish export firms.FindingsThe results obtained support the claim that substantial differences do exist between fast and gradual internationalising firms. The firms included in the more international active group are characterised by: a proactive attitude on the part of managers with regard to internationalisation activities, a strategy based on market…
Exit with vertical product differentiation
2005
Abstract This paper presents a duopoly model of exit from a declining industry with vertical product differentiation. It extends previous IO models on exit that have so far ignored demand effects. The model shows how the interplay between demand and technological factors determine the order of exit. Therefore, demand factors are relevant and should be taken into account. Thus, the firm with a longer tenure as a profitable monopolist does not necessarily outlast its rival. In addition, this paper argues that the low-quality firm may find it optimal to stay in the market despite making temporary losses to outlast its rival.
Entry and exit in a vertically differentiated industry
2011
This paper presents a duopoly model of firm rivalry in a vertically differentiated industry when market dynamics is explicitly accounted for. It shows how the interplay between demand (degree of product differentiation, demand elasticity) and cost (fixed and quality costs) factors determine firms’ relative strength when quality is irreversible. The main strategic choices are product quality, price and the timing of entry and exit. Further, firms incur sunk quality costs at time of entry and operating fixed costs of maintaining quality. Although the low quality firm may outlast its rival in the declining phase, both firms wish to be the “quality leader”.
Excessive vs. insufficient entry in spatial models: When product design and market size matter
2020
Abstract Under spatial product differentiation and product design, we identify conditions for either excessive or insufficient firm entry. We extend previous settings, based on the Salop circular model, to analyze the combined role of positive demand elasticity and endogenous targeted product design. First, we show that, given the number of firms, the equilibrium level of targeted design is either excessive or insufficient, depending on demand elasticity. Second, with free entry, we show that the degree of targeted product design increases with the relative market size and decreases with demand elasticity. Based on these effects, the interplay between demand elasticity and market size yield…
Strategic interactions on differentiated markets and public policies
2017
In economy, the competition analysis among firms have a significance importance because of the complexity of some elements. This thesis examines the strategic interactions on differentiated markets in general equilibrium while proposing the public policies to reduce the distortions due to the imperfect behaviors. This thesis takes into account the differentiation of products in order to obtain the new conclusions and/or to extend those existing. We thus pursues two objectives. Fisrt, the construction of a model of imperfect competition on differentiated markets in a general equilibrium framework. Second, the evaluation of the consequences of the model in terms of economic policies. At begin…
MIXED OLIGOPOLY, PRODUCT DIFFERENTIATION AND COMPETITION FOR PUBLIC TRANSPORT SERVICES*
2006
This paper explores frequency and pricing decisions in a horizontally and vertically differentiated duopoly when there is competition between means of transport and where one of the firms need not necessarily maximize profits. The private and the mixed duopoly are compared and distortions from the social optimum are identified, both analytically and numerically. A mixed duopoly does not recover the socially optimal solution. However, the presence of a (public) non-profit maximizing operator is a useful measure to get closer to the social optimum. When both operators are (private) profit maximizers, some control measures such as price caps and minimum service availability would reduce the di…
Do Rent-Seeking and Interregional Transfers Contribute to Urban Primacy in Sub-Saharan Africa?
2006
We develop an economic geography model in which mobile skilled workers choose between working in the production sector or becoming part of an unproductive political elite. The elite sets tax rates on skilled and unskilled workers to maximize its own welfare by extracting rents, thereby influencing the spatial allocation of production and changing the available range of consumption goods. We show that such behavior increases the likelihood of agglomeration and of urban primacy. In equilibrium, the elite may tax the unskilled workers but will never tax the skilled workers, and there are rural-urban transfers towards the agglomeration. The size of the elite and the magnitude of the tax burden …
QUALITY COMPETITIVENESS OF LATVIA’S WOOD INDUSTRY
2012
Quality is a complex phenomenon and there exist no general accepted definition, which fits every purpose and all the complexities in teal economics. While competitiveness of enterprises has been studied by many scholars around the world, competitiveness of nations is a relatively new discipline. Studies of export competitiveness in the world markets are not new. Several attempts to evaluate export competitiveness have been made in the past, primarily in Eastern Europe. In Czechoslovakia, for example, a detailed and comprehensive analysis of the study was undertaken already in the 1960’s. Similar approach was used by World Bank studies of the price and quality competitiveness of exports by o…
Networks of manufacturers and retailers
2011
We study the endogenous formation of networks between manufacturers of differentiated goods and multi-product retailers who interact in a successive duopoly. Joint consent is needed to establish and/or maintain a costly link between a manufacturer and a retailer. We find that only three distribution networks are stable for particular values of the degree of product differentiation and link costs: (i) the non-exclusive distribution & non-exclusive dealing network in which both retailers distribute both products is stable for intermediate degree of product differentiation and small link costs; (ii) the exclusive distribution & exclusive dealing network in which each retailer distributes a dif…