Competition with Aftermarket Power When Consumers Are Heterogeneous

We study a model of competitive foremarkets and partly monopolized aftermarkets. We show that high aftermarket power prompts firms to engage in inefficiently aggressive below‐cost pricing in the foremarket. This inefficiency is driven by the presence of consumers with valuations below marginal cost. While for intermediate aftermarket power their presence leads to a competition‐softening effect, for high aftermarket power firms attract increasing numbers of unprofitable consumers by aggressively pricing below cost. For high aftermarket power, firms' equilibrium profits can therefore be decreasing in aftermarket power but are always higher than for low aftermarket power. If firms engage in price discrimination by bundling the foremarket and aftermarket goods or by reducing their aftermarket power, they avoid selling to unprofitable consumers but also reduce the competition‐softening effect. This decreases firms' equilibrium profits but increases consumer and social welfare.     

When Does Aftermarket Monopolization Soften Foremarket Competition?

This paper investigates firms' abilities to tacitly collude when they each monopolize a proprietary aftermarket. When firms' aftermarkets are completely isolated from foremarket competition, they cannot tacitly collude more easily than single‐product firms. However, when their aftermarket power is contested by foremarket competition as equipment owners view new equipment as a substitute for their incumbent firm's aftermarket product, profitable tacit collusion is sustainable among a larger number of firms. Conditions under which introduction of aftermarket competition hinders firms' ability to tacitly collude are characterized.     

Exercising Market Power in Proprietary Aftermarkets

Over 20 recent antitrust cases have turned on whether competition in complex durable-equipment markets prevents manufacturers from exercising market power over proprietary aftermarket products and services. We show that the price in the aftermarket will exceed marginal cost despite competition in the equipment market. Absent perfectly contingent long-term contracts, firms will balance the advantages of marginal-cost pricing to future generations of consumers against the payoff from monopoly pricing for current, locked-in equipment owners. The result holds for undifferentiated Bertrand competition, differentiated duopoly, and monopoly equipment markets. We also examine the effects of market growth and equipment durability.     

Exercising Market Power in Proprietary Aftermarkets

Over 20 recent antitrust cases have turned on whether competition in complex durable-equipment markets prevents manufacturers from exercising market power over proprietary aftermarket products and services. We show that the price in the aftermarket will exceed marginal cost despite competition in the equipment market. Absent perfectly contingent long-term contracts, firms will balance the advantages of marginal-cost pricing to future generations of consumers against the payoff from monopoly pricing for current, locked-in equipment owners. The result holds for undifferentiated Bertrand competition, differentiated duopoly, and monopoly equipment markets. We also examine the effects of market growth and equipment durability.     

产品定价的排队博弈分析

产品定价是企业经营决策的重要内容之一,利用排队博弈的方法分析企业定价策略是最近几年发展起来的一种新思想。本文研究了在双寡头竞争的市场条件下,企业产品最优定价的排队博弈模型,分析了产品价格与成本、质量和交易等待成本之间的关系,推导出最优定价策略的纳什均衡解。最后给出了一家企业的产品最优定价实例。     

Customer service-focused HRM systems and firm performance: evidence from the service industry in Taiwan

Abstract

This study adopts a resource-based view, attraction–selection–attrition theory and a focused approach to examine the link between service-focused human resource management (HRM) systems and firm performance. Internally, we examine employee competency as the ‘black box’ between service-focused HRM systems and firm performance. Externally, we examine the effect of the interplay of a service-focused strategy and service-focused HRM systems in predicting firm performance. We collect data from different sources (i.e. executives, human resource members, and line managers). Using a final sample included 2120 respondents from 175 firms in the service industry in Taiwan, the results show that customer service-focused employee competency transmitted 53% of the effect of customer service-focused HRM systems on firm performance. In addition, when a firm implements a less service-focused business strategy, service-focused HRM systems leads to significant improvement in firm performance. Implications for research are discussed.     

网络外部性、内生成本差异与企业定价策略

在产品成本内生条件下,通过建立扩展的Hotelling模型,分析网络外部性对企业定价策略的影响,结果显示:当网络外部性强度较低时,企业将选择歧视定价策略,当网络外部性强度较高时,企业将选择单一定价策略;在两种定价策略下,Nash谈判能力强的企业将获得更高的市场份额和利润;社会福利大小由网络外部性强度和企业Nash谈判能力共同决定,与产品定价策略无关,当网络外部性强度较高时,社会福利与企业间Nash谈判能力的差异正相关,反之则负相关。     

Randal Heeb Innovation and Vertical Integration in Complementary Markets

This paper studies vertical integration by an essential-good monopolist into complementary markets. Unlike previous studies of complementary products, consumers are allowed to purchase some components of a complementary basket, but not others. Two different pricing strategies by the integrated firm may emerge. In mass-market equilibria, the price of the complement under integration is zero and it is given away with the essential good. Niche-market equilibria have more conventional pricing. This dichotomy is consistent with consumer software pricing. Integration enhances consumer and total surplus, unless it leads to exit by the higher-quality rival, in which case welfare is reduced. Exit is most likely when it is least damaging to consumer welfare. Integration reduces innovation by the rival firm. The effect on innovation by the integrated firm is ambiguous, but numerical computation of an extended model indicates that integration increases the innovation of the integrated firm and enhances welfare.     

Optimal dynamic pricing for sports games with habitual attendance

This paper provides a theoretical analysis of the optimal pricing decisions of a sports team that maximizes lifetime profits in sports markets where game attendance is habit‐forming for sports fans. The long‐run equilibrium price and attendance level are found to be greater than the counterparts of the static framework, respectively. The infinite horizon model shows that the pricing strategy of the firm brings about an upward‐crossing of two different dynamic price paths where the price path with stronger habit formation initially stays below, catches up, and ultimately rises above the price path with weaker habit formation. It is worth noting that the upward‐crossing phenomenon is not fully understood in a finite‐period model. Copyright © 2008 John Wiley & Sons, Ltd.     

跨市场上市公司审计定价研究

本文从我国跨市场上市公司审计师选择的特点出发,考察了境内外审计市场不同需求弹性对审计收费的影响,并对协同效应和范围经济对审计定价的影响进行了研究。结论表明,当审计师对境外报表进行审计时,“四大”的审计收费显著高于非“四大”。而当会计师事务所对境内报表进行审计时,“四大”的审计定价与非“四大”相比无显著差异。结论验证了“四大”不同市场不同定价的竞争策略,如果进行审计的会计师事务所之间可以实现协同效应或范围经济,从而能节约跨市场上市公司的时间和精力,上市公司将愿意付出更多的审计费用。结论支持了境内会计师事务所可以通过与境外会计师事务所建立联系构筑竞争优势的策略。     

Equilibria on a circular market when consumers do not always buy from the closest firm

Review of Economic Design - We study spatial competition by firms which is often studied in the context of linear markets where customers always shop at the nearest firm. Here, customer behavior is...     

Luxury products for the circular economy? A case study of Bang & Olufsen

This paper examines whether luxury products can support a circular economy. This is done through a literature review of luxury products and the links to circular economy, as well as a case study of Bang & Olufsen (B&O). The literature review revealed links between some of the core characteristics of luxury products and the circular economy. This included aspects such as the high quality, durability, service schemes, extended warranties, and large aftermarkets. The case study supports the links between the inner circles in the circular economy (maintenance, repair, and reuse) and some of the core characteristics of luxury products. B&O produces products with a long lifespan, has extended warranties, repair and service schemes, spare part availability for 8 years, an aftermarket, and leasing schemes. B&O also does reconditioning of components for its repair loop, conducts dismantling tests, marks plastic parts, and has a negative list that excludes certain hazardous components.     

航空快递的经营特性与管理战略

在阐述我国近年来航空快递市场发展状况与趋势的基础上，分析了航空快递业务管理的三大特性：服务管理特性、物流管理特性与网络管理特性．指出航空快递业务网络是企业客户网络、航线网络、地面网络、信息网络、资金网络等共同构成的统一体，最后论述了航空快递企业的管理战略；     

Apple's disaster: Linking two‐sided markets and strategic delegation

Asymmetric pricing structure and different intergroup network externalities are characteristics of two‐sided markets not captured in the analysis of one‐sided markets. Focusing on Cournot duopoly where membership decision may be delegated to a manager, several equilibrium regimes are sustained depending on the fixed cost of managerial hiring and strength of the network externality exerted by the side whose demand is more price sensitive. The change from null to full delegation sharpens the asymmetric pricing structure and reduces the price level in two‐sided markets. Contrary to one‐sided markets with direct network effects, the prisoner's dilemma holds for sufficiently strong indirect network externalities. Imperfect interside discrimination of managerial incentives ensures profit maximization and efficient consumers' allocation. Private hiring should occur when the two‐sided market exhibits symmetric pricing structure. An explanation for Apple's unprecedented event is provided. The reduction of revenue and managerial bonus in 2016 may be justified by the dissemination of full delegation in the Chinese information technology industry. Apple's upcoming strategy may consist on reducing both access prices, although the side whose demand is more price sensitive should have a greater price reduction. Alternatively, improving the content quality may constitute Apple's corporate strategy, thereby inducing a skimming pricing strategy on Chinese rivals.     

Briefing Paper: What Economists can learn from Game Theory

Game theory is a branch of mathematics which analyses interdependent decision-making. It attempts to explain how decision-makers might take into account the likely response of others in formulating their own decisions. It has long been applied to microeconomics especially to the theory of the firm under oligopoly where the firm, in devising its pricing and production strategy, will take into account the likely reactions of other firms within the industry. More recently it has been appreciated that many situations in macroeconomics can be analysed in terms of game theory. For example, if one country introduces import controls, how will others react? If one country tries to control inflation by adopting a tough monetary policy, or tries to reflate, what will other countries do? How will exchange rate speculators respond to the government's announcement that it will not intervene in currency markets? Will they believe the government or will they adopt actions which will eventually force the government to intervene? How will markets respond if the government changes its macro-economic strategy? In some cases the “players” are the government and the business community, in other cases one government may be playing against another. In this Briefing Paper we introduce some ideas and results from game theory and show how they can be applied to macroeonomics as well as microeconomics.     

Resale price maintenance: A managerial perspective

Managers can improve firm profits by selecting the appropriate pricing strategy. In this article, we show how managers can use one particular controversial pricing strategy—resale price maintenance (RPM)—to enhance firm profits. We first discuss the antitrust treatment of RPM, both in the United States and internationally. Then we examine the economic effects of implementing RPM in several key contexts: product promotion, quality certification, prestige goods, and online retail. We also discuss the effects of RPM on entry of new firms.     

网络零售业中的动态定价模式

面对日益激烈的市场竞争和对客户群体的细分,动态定价策略越来越受到商家的青睐。尤其是近年来伴随着网络销售的出现和高科技的应用,基于需求的动态定价策略愈发显示出日益重要的意义。它为实现客户与企业资产回报最大化创造了新的途径。本文首先介绍了三种常见的动态定价策略,然后从经济意义和技术角度分析了动态定价策略的可能性和必要性,最后提出了动态定价策略面临的挑战。     

The service climate‐firm performance chain: The role of customer retention

This study examines the role of customer retention as a mediator in the service climate–firm performance chain. Using a predictive design that involves data collected from 1,500 automotive service stores from 12,518 employees and approximately 30,000 customers, a model linking service climate (a concern for employees and customers), customer satisfaction, customer retention, and firm performance was tested. Notably, the results support the overall model and the hypothesized mediating effect of customer retention regarding the relationship between customer satisfaction and firm performance. © 2011 Wiley Periodicals, Inc.     

A Modelof Competitive Limit Pricing

This paper offers a new theory of limit pricing. Incumbents from different markets or regions "compete" against one another, with each attempting to price in a manner that deflects entry into the others' markets. An entrant is imperfectly informed as to the incumbents' respective investments in cost reduction and seeks to enter markets in which incumbents have high costs. In a focal equilibrium, the entrant uses a simple "comparison strategy," in which it enters only the highest-priced markets, and incumbents engage in limit-pricing behavior. The influence on pricing of the number of markets and the scope of entry is also reported. Throughout, the central feature of the analysis is that an incumbent's price affects its investment incentives, with lower prices being complementary to greater investment.     

Do board composition and investor type influence innovativeness in SMEs?

Companies need to adapt and evolve if they wish to survive. Future success lies in the ability to develop innovative solutions for customer??s problems and needs. This study aims to explore the influence of corporate governance and ownership structure on (product) innovativeness in a sample of 49 small and medium sized firms (SMEs) in the Belgian manufacturing industries. The main findings of the study are twofold. Firstly, a significant positive relationship between innovativeness and the size of a firm??s board has been found. Secondly, business-to-consumer markets tend to be more innovative than business-to-business markets. No significant relationship was found between the investor type and a firm??s innovativeness.