Suchergebnisse

AbstractAn alliance often involves one firm acquiring an equity stake in its alliance partner. We explore oligopoly models that capture the link between knowledge transfer and partial equity ownership (PEO), where alliance partners can choose the level of PEO. PEO can increase the alliance partners' profitability by inducing knowledge transfer, but the PEO itself reduces their joint profit because it induces other firms to take more aggressive actions. This trade‐off endogenously determines the level of PEO, which can benefit consumers and/or improve welfare. Given the growing antitrust interest in PEO, we explore the antitrust implications of our analysis.

In spatial competition, public infrastructure plays a crucial role in determining product market outcomes. In our model, consideration of infrastructure's impact on the product market drives the preferences of consumers in their dual role as voter/taxpayers. The spatial heterogeneity of consumers produces conflicting political interests and in many cases inefficient outcomes. However across both exogenous and endogenous market environments product market competition consistently leads to higher levels of publicly funded infrastructure than monopoly/collusion. Furthermore, competition's boost to the popular support for infrastructure investment is often excessive while monopoly leads to underinvestment.

We analyze a successive vertical oligopoly model that incorporates vertical relationships between industries and demonstrate that free entry in an industry that produces a homogeneous product can lead to a socially insufficient number of firms. This is in contrast with the proevious findings that, under Cournot oligopoloy with fixed set‐up costs, level of entry in the free‐entry equilibrium is socially excessive. It has often been argued that this result can provide a justification for apparently anticompetitive entry regulations. Our finding yields an important policy implication that such a justification is not necessarily valid when vertical relationships ar taken into account.

Does competitive pressure foster innovation? In addressing this important question, prior studies ignored a distinction between discrete innovation aiming at entirely new technology and continuous improvement consisting of numerous incremental improvements and modifications made upon the existing technology. This paper shows that distinguishing between these two types of innovation will lead to a much richer understanding of the interplay between firms' incentives to innovate and competitive pressure. In particular, our model predicts that, in contrast to previous theoretical findings, an increase in competitive pressure measured by product substitutability may decrease firms' incentives to conduct continuous improvement, and that an increase in the size of discrete innovation may decrease firms' incentives to conduct continuous improvement. A unique feature of this paper is its exploration of the model's real-world relevance and usefulness through field research. Motivated by recent declines in levels of continuous improvement in Japanese manufacturing, we conducted extensive field research at two Japanese manufacturing firms. After presenting our findings, we demonstrate that our model guides us to focus on several key changes taking place at these two firms; discover their interconnectedness; and finally ascertain powerful underlying forces behind each firm's decision to weaken its investment in traditional continuous improvement activities. -- Competitive pressure ; continuous improvement ; discrete innovation ; field research ; location model ; product substitutability ; small group activities ; technical progress

Capital inflows with full repatriation give rise to welfare improvement possibilities in a small tariff‐distorted economy when imperfect competition and increasing returns are allowed for in one sector of a two‐sector model. This is in contrast to the Brecher–Alejandro proposition that capital inflows with full repatriation are necessarily immiserizing for a small tariff‐ridden economy. We find that welfare gains chances are greater (a) the higher the expenditure share of the capital‐intensive differentiated good; (b) the lower the substitutability between brands; and (c) the lower the share of tariff revenue in national income.