Internal versus external growth in industries with scale economies: A computational model of optimal merger policy

We study optimal merger policy in a dynamic model in which the presence of scale economies implies that firms can reduce costs through either internal investment in build- ing capital or through mergers. The model, which we solve computationally, allows firms to invest or propose mergers according to the relative profitability of these strategies. An antitrust authority is able to block mergers at some cost. We examine the optimal policy when the antitrust authority can commit to a policy rule and when it cannot commit, and consider both consumer value and aggregate value as possible objectives of the antitrust authority. We find that optimal policy can differ substantially from what would be best considering only welfare in the period the merger is proposed. We also find that the abil- ity to commit can lead to a significant welfare improvement. In general, antitrust policy can greatly affect firms` optimal investment behavior, and firms` investment behavior can in turn greatly affect the antitrust authority`s optimal policy

Exclusivity and exclusion on platform markets

We examine conditions under which an exclusive license granted by the upstream producer of a component that some consumers regard as essential to one of two potential suppliers of a downstream platform market can make the unlicensed supplier unprofitable, although both firms would be profitable if both were licensed. If downstream varieties are close substitutes, an exclusive license need not be exclusionary. If downstream varieties are highly differentiated, an exclusive license is exclusionary, but it is not in the interest of the upstream firm to grant an exclusive license. For intermediate levels of product differentiation, an exclusive license is exclusionary and maximizes the upstream firm’s payoff

Are We Wise About Sub-Fields in IS? Lessons from Forming and Sustaining a Research Community

Sub-fields within I.S. generate benefits for their participants and for the larger research discipline. Sub-fields can also fragment and compete with the broad field they emerge from. One of the largest and most active research groups in the ICIS community is the researchers examining Information Systems Economics. After 20 years of the Workshop on Information Systems and Economics (WISE), this is a moment to identify what sub-fields contribute in I.S. and look forward to what sub-fields can do for ICIS researchers and I.S. practice in the future