Complementary Goods: Creating, Capturing, and Competing for Value

Yalcin, Taylan; Ofek, Elie; Koenigsberg, Oded; Biyalogorsky, Eyal

doi:10.1287/mksc.2013.0785

Cited by 29 publications

(14 citation statements)

References 16 publications

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“…First, from (35), (36) Price competition in stage 2 leads to prices and quantities as given in ( 30), ( 31), ( 32), (33) and (34). Thus, it is straightforward for us to obtain the social welfare: the total sum of …rms'pro…ts and consumer surplus, denoted as G( H ; H ), which is a function of the second degree of H and H .…”

Section: Appendixmentioning

confidence: 99%

Investment in quality upgrade and regulation of the internet

Baranès

Vuong

2022

J Regul Econ

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This paper studies the investment decision by a monopolistic internet service provider (ISP) in different regulatory environments. We consider that the ISP could technically provide separate quality upgrades to two vertically differentiated content providers (CPs); therefore, it could potentially extract the CPs' marginal profits through an offer to provide the quality upgrades. Our results show that if unregulated, the ISP optimally provides asymmetric quality upgrades, in favor of the high-quality CP. This subsequently increases the degree of content differentiation, softening competition between the CPs. Imposing a nondiscrimination regulation that forces the ISP to provide an equal quality upgrade to both CPs, however, can reduce the ISP.s investment incentive and social welfare. Furthermore, the investment level is higher if the regulated ISP is allowed to charge the CPs. Finally, a socially optimal investment can be opposite to the ISP's choice when the contents are enough substitutes.

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Section: Appendixmentioning

confidence: 99%

Investment in quality upgrade and regulation of the internet

Baranès

Vuong

2022

J Regul Econ

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“…Sinitsyn (2012) studies the price promotion strategies of two competing firm, each produces two complementary products. Yalcin, Ofek, Koenigsberg, and Biyalogorsky (2013) find that when separate firms sell strictly complementary products, the prices and levels of quality are lower than what an integrated firm would choose. Differently, this paper considers two manufacturers produce imperfectly complementary products and can sell them through a retailer or the direct channel, we analyze equilibrium channel choices in different power structures.…”

Section: Related Literaturementioning

confidence: 99%

Channel configuration in a complementary market under different power structures

Mao

Guan

et al. 2020

Naval Research Logistics

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This paper investigates the impact of channel selection power on the firms' channel configuration strategies in a market with two upstream manufacturers providing complementary products and one downstream retailer who can resell the products. Each manufacturer can sell its product either directly by incurring a selling cost or indirectly via the retailer, in which the decision is further dependent on the relative channel selection powers between itself and the retailer. We investigate three scenarios depending on the possible power structures among the firms and show that the equilibrium channel configuration strategy hinges highly on the channel selection power, the direct selling cost and the degree of complementarity between the two products. The manufacturer may prefer direct selling when it is more powerful than the retailer and both the direct selling cost and the degree of complementarity are relatively low. However, when the degree of products' complementarity is sufficiently high, a manufacturer would not choose direct selling even though there is no direct selling cost. We also show that a stronger channel selection power does not necessarily benefit but may occasionally hurt a manufacturer's profitability. For the manufacturer who does not have channel selection power before, the enhanced channel selection power endows it with more selling options but also encourages the leading manufacturer (who already has the channel power) to design a more aggressive channel configuration strategy that only benefits itself but hurts the others.

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“…Other researchers also propose that the innovation investment cost is a quadratic function of quality when the firm develops products or delivers greater quality levels [34,35]. Also, the supply chain's total profit is π 0 � pD 0 − ξQ 2 .…”

Section: E Basementioning

confidence: 99%

“…e experimental parameters are δ c , Q, α, p, and b, while the other parameters remain fixed. As done in previous numerical examples (e.g., [33,34]), the numerical values have been calculated assuming b � 0.25 p. First, we compare the TASD model with the base case and the centralized case when there is no constraint on the precommitted order quantity.…”

Section: Numerical Examplesmentioning

confidence: 99%

The Impact of Advance Selling Strategies on a Three-Echelon Supply Chain in the Presence of Social Influence

Niu

Yang

2020

Mathematical Problems in Engineering

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As the quality of new products is ex-ante uncertain, social influence plays an important role in the diffusion of a new product. An important question is how to expand public knowledge about consumer experience with a new product by using promotion strategies. This paper discusses the impact of advance selling strategies on a three-echelon supply chain when upstream enterprises launch a new product facing strategic consumers under social influence. This problem is modeled as a Stackelberg game, and a two-advance-selling-discount model is presented. Furthermore, we consider the impact of advance purchase behavior on the financing strategy when the retailer places an advance order. Several results are obtained: (i) the consumers’ utility in the second period is increasing in the number of predecessors. (ii) Upstream enterprises will provide deeper advance selling discounts when consumers become more patient or predecessors have a greater influence on imitators. Moreover, the total demand will increase when the consumer’s discount factor decreases or the impact intensity of predecessors increases. However, high innovation levels will drive enterprises to set high advance selling discounts. We also obtain the condition under which the total demand increases quickly as the innovation level changes. (iii) The two-advance-selling-discount model yields Pareto-improved results compared with the case where there is no advance purchase, though it cannot coordinate the supply chain. Finally, we extend the model to analyze the two-advance-selling-discount model with a minimum order quantity constraining the precommitted order quantity, and we show this can allow the enterprises to increase their profits. We also determine a condition under which the upstream enterprises should put a constraint on the minimum order quantity.

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Complementary Goods: Creating, Capturing, and Competing for Value

Cited by 29 publications

References 16 publications

Investment in quality upgrade and regulation of the internet

Investment in quality upgrade and regulation of the internet

Channel configuration in a complementary market under different power structures

The Impact of Advance Selling Strategies on a Three-Echelon Supply Chain in the Presence of Social Influence

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