Quality and capacity choices in a vertical differentiation model with congestion

Elhadj, Nada Ben; Jebsi, Khaïreddine; Lahmandi-Ayed, Rim

doi:10.1111/j.1742-7363.2012.00190.x

Cited by 11 publications

(6 citation statements)

References 23 publications

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“…Tomaru et al (2011) analysed capacity selection considering management delegation. Ben Elhadj et al (2012) characterized the subgame perfect equilibrium for the homogenous market case. Nakamura (2014) examined capacity selection between a consumer-friendly firm and a standard absolute profit maximisation firm.…”

Section: Literature Reviewmentioning

confidence: 99%

Capacity Sharing Strategy With Sustainable Revenue-Sharing Contracts

Chen

Shi

Liu

2021

Technological and Economic Development of Economy

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This paper develops a duopoly model to analyse capacity sharing strategy and the optimal revenue-sharing contract under a two-part tariff and examines the effects of capacity sharing, cost, and sharing charges in three scenarios. The paper uses the two-part tariff method and adds a more realistic assumption of incremental marginal costs to improve the research on capacity sharing strategies. The results show that capacity constraints affect the sustainable development of firms. A sustainable revenue-sharing contract can create a win-win situation for both firms and promote capacity sharing. Capacity sharing, cost, and the revenue-sharing rate have different impacts in different scenarios; the optimal revenue-sharing rate and fixed fee can be determined to maximise the profits of firms that share capacity. However, capacity sharing may not improve social welfare.

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Section: Literature Reviewmentioning

confidence: 99%

Capacity Sharing Strategy With Sustainable Revenue-Sharing Contracts

Chen

Shi

Liu

2021

Technological and Economic Development of Economy

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Section: Introductionmentioning

confidence: 99%

“…Navon et al (1995) and Grilo et al (2001) consider spatial models of product differentiation with positive and negative network externalities. Models that combine the intrinsic value of a product with network externalities include among others Ghazzai and Lahmandi-Ayed (2009) and Elhadj et al (2012). Lambertini and Orsini (2002) compare a single-product monopoly equilibrium and the first best optimum when consumers' utility depends, not only on the intrinsic characteristics of the product, but also on the social status the purchase of it confers to them.…”

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confidence: 99%

Optimal taxation with positional considerations

Καρακώστα

Zacharias

2022

J Public Economic Theory

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This paper analyzes the optimal commodity tax policy, in a generalized vertical differentiation model in which consumers have positional considerations. Consumers enjoy having a product which is better than that owned by others, and feel envy when others own a better product than them. We examine the impact of these positional considerations on the optimal tax and welfare when a monopoly produces two variants of such good. The standard result that the government should subsidize the product, can be reversed in our setting. In the presence of positional concerns, the optimal tax rate can be positive. Furthermore, the positional effects determine the level of the tax pass‐through on prices. Finally, the tax levied on the high‐quality variant affects the price of the low‐quality variant and vice versa.

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“…After classifying ownership and management rights, Tomaru et al (2011) set up a mixed duopoly model to examine the capacity choice of SOEs and private enterprises under different types of authorization and discuss the effects of privatization on the type of management authorization and social welfare. Elhadj et al (2012) investigate the quality and capacity choice in a vertical differentiation market with congestion. Fernandez-Ruiz (2012) probes into the capacity choice of a public enterprise and a private enterprise in a mixed duopoly.…”

Section: Introductionmentioning

confidence: 99%

Capacity Choice and Government Regulation in a Vertical Industry

Chen

Wang

Liu

2020

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This paper sets up an industry competition model consisting of two upstream enterprises and two downstream enterprises. Then we rely on the model to explore how non-regulation and different regulatory policies (maximizing the total profits of the upstream enterprises, the social welfare of the upstream industry or the overall social welfare) affect the following factors: the excess capacity, enterprise profits, consumer surpluses, social welfare in the upstream and downstream enterprises and the overall social welfare. The following conclusions are drawn from our research. First, whether and how the government regulates the capacity choice greatly affect the equilibrium outcomes, as well as the welfare distribution among the upstream enterprises, downstream enterprises, and consumers. The specific effects are dependent on market demand and enterprise cost. Second, the government should formulate its regulatory policies on capacity choice based on the overall social welfare of the entire supply chain. If the government aims to maximize the profits of the upstream enterprises, the social welfare of the downstream industry will be negatively affected. Third, excess capacity does not necessarily suppress social welfare. Under certain conditions, the worst scenario of excess capacity may occur under the pursuit of the maximal overall social welfare. Excess capacity may arise from various causes, rather than market competition or government regulation alone. Excess capacity cannot be attributed solely to government failure. These conclusions have some significance for optimizing capacity regulation policies.

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Quality and capacity choices in a vertical differentiation model with congestion

Cited by 11 publications

References 23 publications

Capacity Sharing Strategy With Sustainable Revenue-Sharing Contracts

Capacity Sharing Strategy With Sustainable Revenue-Sharing Contracts

Optimal taxation with positional considerations

Capacity Choice and Government Regulation in a Vertical Industry

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