scholarly journals Retail outsourcing strategy in Cournot & Bertrand retail competitions with economies of scale

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Mingxia Li ◽  
Kebing Chen ◽  
Shengbin Wang
Keyword(s):  
Economies Of Scale ◽  
Market Competition ◽  
Equilibrium Structure ◽  
Dominant Strategy ◽  
Chain Structure ◽  
Cournot Competition ◽  
Channel Structure ◽  
Bertrand Competition ◽  
Substitutable Products ◽  
Competition Mode

<p style='text-indent:20px;'>This paper investigates a manufacturer's retail outsourcing strategies under different competition modes with economies of scale. We focus on the effects of market competition modes, economies of scale and competitor's behavior on manufacturer's retail outsourcing decisions, and then we develop four game models under three competition modes. Firstly, we find the channel structure where both manufacturers choose retail outsourcing cannot be an equilibrium structure under the Cournot competition. The Cournot competition mode is less profitable to the firm than the Bertrand competition when the products are complements. Secondly, under the hybrid Cournot-Bertrand competition mode, there is only one equilibrium supply chain structure where neither manufacturer chooses retail outsourcing, when the substitutability and complementarity levels are not sufficiently high. In addition, setting price (quantity) contracts as the strategic variables is the dominant strategy for the direct-sale manufacturer who provides complementary (substitutable) products. Thirdly, both competitive firms will benefit from the situation where they choose the same competition mode. When the products are substitutes (complements), both of them choose the Cournot (Bertrand) competition mode. Finally, we show that the economies of scale have little impact on the equilibrium of the outsourcing structure but a great impact on the competition mode equilibrium.</p>

Endogenous Expectations Management with Network Effects: A Note

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Kangsik Choi ◽  
Seonyoung Lim
Keyword(s):  
Network Effects ◽  
Dominant Strategy ◽  
Cournot Competition ◽  
Pareto Efficiency ◽  
Bertrand Competition ◽  
Expectations Management ◽  
Intensity Of Competition ◽  
Commitment Device

Abstract We examine the endogenous choice of commitment device to consumers’ expectations with network effects. Under Cournot competition, we show that choosing commitment to expectations for each firm is a dominant strategy regardless of the strength of network effects. However, under Bertrand competition, three types of commitment with both/no commitment/multiple emerge in equilibrium depending on the strength of network effects. Thus, we obtain different Pareto efficiency between Bertrand and Cournot competition, depending on the intensity of competition.

scholarly journals Competitive Analyses of the Pig Industry in Swaziland

2018 ◽  
Vol 10 (12) ◽  
pp. 4402 ◽  
Author(s):  
Sandile Ndwandwe ◽  
Ruey-Chee Weng
Keyword(s):  
Economies Of Scale ◽  
Swot Analysis ◽  
Smallholder Farmers ◽  
Market Competition ◽  
Production Capacity ◽  
Future Market ◽  
Strategy Formulation ◽  
Pig Production ◽  
Leadership Strategy ◽  
Uncertain Future

Over recent decades, Swaziland’s pork industry has been stagnant, failing to meet the domestic demand for pork. It is only in recent years that the number of pig farmers has increased rapidly, with smallholder farmers taking the lead. However, while higher demand for pork could lead to opportunities for growth, with uncertain future markets, increased pig production capacity could subject farmers to extreme market competition and failure to sell their produce. This study used a survey and SWOT analysis to assess the current pig production and market performance of smallholder farms in Swaziland. To quantify SWOT factors, the Analytical Hierarchy Process (AHP) was used to derive priorities for subsequent formulation of potential pig production strategies that are resilient both to market and climate changes. Strategy formulation was based on Porter’s cost leadership strategy. The findings revealed that, currently, the pig industry is attractive, and that the present is probably the best time for smallholder farmers to maximize their profits. Unfortunately, the industry was found to be threatened by the expected increase in production capacity, future market competition, and the socio-environmental challenges associated with expansion. Despite this, the findings suggest that smallholder farmers can survive future market challenges by strategically using agro-industrial by-products as alternative feed ingredients to reduce production cost. The formation of farmers’ associations could benefit smallholder farmers through economies of scale, processing and product value addition, and increased access to markets, and unity could strengthen their position in the market when bargaining for better prices.

scholarly journals APPLICATION OF DEA METHOD IN EFFICIENCY EVALUATION OF PUBLIC HIGHER EDUCATION INSTITUTIONS

2014 ◽  
Vol 20 (1) ◽  
pp. 25-44 ◽  
Author(s):  
Joanicjusz Nazarko ◽  
Jonas Šaparauskas
Keyword(s):  
Higher Education ◽  
Economies Of Scale ◽  
Higher Education Institutions ◽  
Market Competition ◽  
Reference Points ◽  
Education Sector ◽  
Public Higher Education ◽  
Comparative Efficiency ◽  
Rational Management ◽  
Public Money

Public higher education sector is under a growing pressure worldwide to increase efficiency and improve the quality of its activities. Limited financial resources as well as detailed regulations and supervision of their spending are the important features of the public higher education sector. Another important and debated issue is the division of public money among higher education institutions (HEI). It is therefore crucial to create stimuli for the rational management of public funds by HEI and for the quality improvement of HEI services. One of the proposed ways to achieve the desired result is the comparative efficiency assessment of HEI activities. Setting clear reference points for HEI, such assessment may be treated as a substitute for market competition. This paper describes a comparative efficiency study of 19 Polish universities of technology. Detailed analysis of potential input, output and environmental variables describing the HEI efficiency model was carried out. The study used the CCR-CRS output-oriented DEA model. It was assumed that HEI had more influence on achieved results than on the amount of their resources. The economies of scale were also studied in relation to the efficiency achieved. Sensitivity of the model to data errors was tested.

scholarly journals Decision and coordination of an O2O supply chain with market segmentation and showrooming effect

2022 ◽  
Vol 15 (1) ◽  
pp. 0-0
Keyword(s):  
Supply Chain ◽  
Market Segmentation ◽  
Cost Sharing ◽  
Single Channel ◽  
Chain Structure ◽  
Channel Structure ◽  
Service Cost ◽  
Online Channel ◽  
Supply Chain Structure ◽  
Better Than

This paper investigates impacts of market segmentation and showrooming effect on the decision-making of an O2O supply chain, and puts forwards a contract to coordinate the O2O supply chain. Results show that, the showrooming effect is beneficial to the manufacturer, retailer and the supply chain, and the retailer will offer offline showrooming service. Under the influence of market segmentation, O2O supply chain is not necessarily better than single-channel supply chain structure. But adopting advertising and other means to improve consumers’ online channel acceptance, it can realize transformation from single-channel to O2O structure. The benefits of showrooming effect can eliminate the disadvantage of market segmentation. Moreover, a service cost sharing contract is put forward, which can perfectly coordinate the O2O supply chain with market segmentation and showrooming effect. These findings help managers to understand which channel structure is optimal by considering market segmentation and showrooming effect and identify possible pathways for them to perfectly cooperation.

BIASED VOLUNTARY DISCLOSURE, EARNINGS TARGET, AND PRODUCT MARKET COMPETITION

2017 ◽  
Vol 12 (03) ◽  
pp. 1750014 ◽  
Author(s):  
HAO-CHANG SUNG ◽  
CHUNSHENG YUAN
Keyword(s):  
Private Information ◽  
Voluntary Disclosure ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Bertrand Competition ◽  
Cost Information ◽  
Oligopoly Model ◽  
Earnings Targets ◽  
Oligopoly Competition

Accounting survey and anecdotal evidence suggest that firms could voluntarily disclose their private information to improve the credibility of earnings targets and to signal meeting /beating of earnings targets. In addition, voluntarily issuing private information can be characterized as a way to influence product market competition. The motivation of this study is to investigate the effect of earnings target on a firm’s voluntary disclosure decision and its impact on oligopoly competition. We consider a two-stage oligopoly model with one-sided incomplete information in which a firm has private information on its type and its marginal cost. We show that a firm can choose a downward biased report about its cost information in Cournot competition. This could increase this firm’s outputs and profits and meet its earnings target as well. In this sense, the effect of earnings target on voluntary disclosure can improve the firm’s competitiveness. In Bertrand competition, a firm can choose an upward biased report about its cost information, and this allows both firms to boost their price level in oligopoly competition and thus both firms can obtain higher profits. In this case, the effect of earnings target on voluntary disclosure could facilitate implicit collusion in price-setting under Bertrand competition. This paper contributes to the research on voluntary disclosure theory in terms of how earnings targets affect product market competition through distorting a firm’s voluntary disclosure decision.

The impact of Wal-Mart Supercenters’ entry on incumbent supermarkets’ profit margins

2017 ◽  
Vol 9 (1) ◽  
pp. 130-140 ◽  
Author(s):  
Yuan Di ◽  
Rigoberto Lopez ◽  
Xiaoou Liu
Keyword(s):  
Economies Of Scale ◽  
Structural Model ◽  
Market Competition ◽  
Fort Worth ◽  
Content Type ◽  
Profit Margins ◽  
Method Of Simulated Moments ◽  
Competitive Edge ◽  
The Usa ◽  
The Impact

Purpose The purpose of this paper is to quantify the impact of Wal-Mart Supercenters (WMSs) on supermarkets’ profit margins using fluid milk in the Dallas/Fort Worth metropolitan area in the USA as a case study. Design/methodology/approach The authors develop a two-stage dynamic entry game to model market competition in the pre- and post-WMS stages, and test the theoretical model using the method of simulated moments and milk scanner data from Dallas/Fort Worth supermarkets. Findings The empirical findings show that the entry of WMSs accounts for an average of about 16.29-25.69 percent decline in milk profit margins of nearby, or incumbent, supermarkets. Economies of scale and chain synergies are found to be five times more significant for WMSs than for incumbent supermarkets, granting Wal-Mart a significant competitive edge. Originality/value This paper quantifies the impact of WMS’s entry on incumbent supermarkets’ profit margins through a structural model of entry. In addition, this paper assesses the effect economies of scale stemming from the ability to provide shopping convenience to consumers as well as chain economies from operating stores near each other.

The Evolution of Inter-Firm Collaboration in Supply Chain Networks

2012 ◽  
Vol 2 (3) ◽  
pp. 1-31 ◽  
Author(s):  
Michael J. Gravier ◽  
M. Theodore Farris
Keyword(s):  
Supply Chain ◽  
Economies Of Scale ◽  
Supply And Demand ◽  
Dynamic Network ◽  
Product Market ◽  
Chain Structure ◽  
Production Costs ◽  
Supply Chain Networks ◽  
Exchange Governance ◽  
Supply Chain Structure

To date, no published study has measured the evolution of supply chain structure and relationships in response to changing product-market development requirements. This research draws upon production literature and exchange governance theory to simulate the interaction of supply and demand environment factors on the growth and development of supply chain relationships. Experiments were conducted to study the effects of different rates of product change, different demand environments, and different economies of scale on the level of integration between firms at different levels in the supply chain. It synthesizes the interrelationships of the simulation variables in order to extend TCA theory into a dynamic network environment by using the CAS paradigm. The study reveals definite patterns of evolution under conditions of differing product-market conditions, it confirms the importance of the balancing transaction and production costs, and it highlights the asymmetries of transactional and production costs in relationships.

STRATEGIC CHOICE BETWEEN PROCESS AND PRODUCT INNOVATION UNDER DIFFERENT COMPETITIVE REGIMES

2010 ◽  
Vol 12 (02) ◽  
pp. 139-159 ◽  
Author(s):  
LUIGI FILIPPINI ◽  
GIANMARIA MARTINI
Keyword(s):  
Product Innovation ◽  
Strategic Choice ◽  
Innovation Adoption ◽  
Vertical Differentiation ◽  
New Product ◽  
Cournot Competition ◽  
Bertrand Competition ◽  
Duopoly Model ◽  
Innovation Type ◽  
Asymmetric Equilibrium

This paper investigates the strategic choice between introducing a process or a product innovation in a duopoly model with vertical differentiation, comparing the outcomes in case of Bertrand and Cournot competition. It is shown that under both competitive regimes three equilibria in innovation adoption may arise: two symmetric equilibria, where firms select the same innovation type, and one asymmetric equilibrium. The competitive regime has an impact on the features of the asymmetric equilibrium, since in case of Bertrand competition, the high (low) quality firm chooses a product (process) innovation, while firms make the opposite choices in case of Cournot competition. The presence of a leapfrogging effect (only in the Cournot case) explains these different outcomes. Last, we find that the Cournot competitors tend to favor the introduction of a new product in comparison with the Bertrand competitors.

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