A note on price competition in product differentiation models

We define a two-variant model of product differentiation which, depending on the number of consumers prefering one variant to the other, provides equilibrium prices reflecting the natural valuation of these variants by the market.

Product innovation and market acquisition of firms

The paper explores the incentives for an incumbent firm to acquire an entrant willing to sell a product innovation, rather than openly compete with this entrant and, in case of acquisition, the incentives to sell simultaneously both the existing products and the new one, rather than specializing on a single variant. We prove that, in some circumstances, an incumbent firm can find it profitable to make an acquisition proposal to the entrant in order to deter entry. Nevertheless, in this acquisition scenario, a product proliferation strategy is never observed at equilibrium. Rather, the incumbent restricts itself to offer either its own variant or the product innovation produced by the entrant, depending on the quality differential existing between them. It follows that, while being available for sale, sometimes the innovation simply remains unexploited

Upstream market foreclosure

This paper investigates how an incumbent monopolistic can weaken potential rivals or deter entry in the output market by manipulating the access of these rivals in the input market. We analyze two polar cases. In the first one, the input market is assumed to be competitive with the input being supplied inelastically. We show that the situation opens the door to entry deterrence. Then, we assume that the input is supplied by a single seller who chooses the input price. In this case we show that entry deterrence can be reached only through merger with the seller of the input.Entry deterrence, Foreclosure, Overinvestment, Bilateral monopoly

A Note on Expanding Networks and Monopoly Pricing

We obtain explicitly the optimal path of prices for a monopolist operating in a network industry during a finite number of periods. We describe this optimal path as a function of network intensity and horizon length and show that the prices are increasing in time and that, for very low network intensity, or very high horizon length, the monopolist will offer the good at zero price in the initial period.

Successive oligopolies and decreasing returns

In this paper, we propose an example of successive oligopolies where the downstream firms share the same decreasing returns technology of the Cobb-Douglas type. We stress the differences between the conclusions obtained under this assumption and those resulting from the traditional example considered in the literature, namely, a constant returns technology.successive oligopolies, vertical integration, technology.

Successive oligopolies and decreasing returns

In this paper we propose an example of successive oligopolies where the downstream firms share the same decreasing returns technology of the Cobb-Douglas type. We stress the differences between the conclusions obtained under this assumption and those resulting from the traditional example considered in the literature, namely, a constant returns technologysuccessive oligopolies, vertical integration, technology

A note on successive oligopolies and vertical mergers

In this paper we analyze how the technology used by downstream firms can influence input and output market prices. We show via an example that both these prices increase under a decreasing returns technology while the countrary holds when the technology is constant.successive oligopolies, vertical integration, technology, foreclosure

Thematic clubs and the supremacy of network externalities

We raise the problem of the minorities survival in the presence of positive network externalities. We rely on the example of thematic clubs to illustrate why and in which circumstances such survival problems might appear, first considering the case of simple network externalities and then the case of cross network externalitiesthematic clubs, network externalities, cross network externalities

The media and advertising : a table of two-sided markets

Media industries are important drivers of popular culture. A large fraction of leisure time is devoted to radio, magazines, newspapers, the Internet, and television (the illustrative example henceforth). Most advertising expenditures are incurred for these media. They are also mainly supported by advertising revenue. Early work stressed possible market failures in program dupplication and catering to the Lowest Common Denominator, indicating lack of cultual diversisty and quality. The business model for most media industries is underscored by advertisers’ demand to reach prospectie customers. This business model has important impllications for performance in the market since viewer sovereignty is indirect. Viewers are attracted by programming, though they dislike the ads it carries, and advertisers want viewers as potential consumers. The two sides are coordinated by broadcasters (or “platforms”) that choose ad levels and program types, and advertising finances the programming. Competition for viewers of the demographics most desired by advertisers implies that programming choices will be biased towards the tastes of those with such demographics. The ability to use subscription pricing may help improve performance by catering to the tastes of those otherwise under-represented, though higher full prices tend to favor broadcasters at the expense of viewers and advertisers. If advertising demand is weak, program equilibrium porgram selection may be too extreme as broadcasters strive to avoid ruinous subscription price competition, but strong advertising demand may lead to strong competition for viewers and hence minimum differentiation (“la pensée unique”). Markets (such as newspapers) with a high proportion of ad-lovers may be served only by monopoly due to a circulation spiral : advertisers want to place ads in the paper with most readers, but readers want to buy the paper with more ads.Advertising finance; two-sided markets; platform competition