Problem definition: Unoccupied waiting feels longer than it actually is. Service providers operationalize this psychological principle by offering entertainment options in waiting areas. A service cluster with a common space provides firms with an opportunity to cooperate in the investment for providing entertainment options while competing on other service dimensions. Academic/practical relevance: Our paper contributes to the literature by being the first to examine co-opetition in a service setting, in addition to developing a novel model of waiting-area entertainment. It also sheds new light on the emerging practice of service clusters and small-footprint retailing. Methodology: Using a queueing theoretic approach, we develop a parsimonious model of co-opetition in a service cluster with a common space. Results: By comparing the case of co-opetition with two benchmarks (monopoly and duopoly competition), we demonstrate that a service provider that would otherwise be a local monopolist can achieve higher profitability by joining a service cluster and engaging in co-opetition. Achieving such benefits, however, requires a cost-allocation scheme that properly addresses an efficiency-fairness tradeoff—the pursuit of fairness may backfire and lead to even lower profitability than under pure competition. Managerial implications: We show that as much as co-opetition facilitates resource sharing in a service cluster, it heightens price competition. Furthermore, as the intensity of price competition increases, surprisingly, service providers may opt to charge higher service fees, albeit while providing a higher entertainment level.
The relationship between executive compensation and bank risk-taking is one of the core topics of corporate governance theory. Especially after the 2008 global financial crisis, due to the characteristics of banks, such as systemic risk, this relationship has become more important. However, though usually calculated on the basis of cash salary and inside equity, which can promote risk incentives, inside debt was considered a tool for risk reduction in prior empirical analyses. Based on actual bank situations, we had doubts about this relationship and wanted to verify the specific relationship between inside debt and risk. We initiated this research by setting up a theoretical model between inside debt and bank default risk and by simulating the result using data from Wells Fargo & Co. to draw the function image. We are the first to define the three kinds of compensation in three dimensions. Then, considering bankruptcy, we found the black box effect exists. Therefore, different from prior views, pay me later not only reduces but also increases risk. We expect our findings to offer help to the formulation of policies for pay contracts.
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