Entry Deterrence and Signaling in Markets for Search Goods

This paper studies entry in markets for search goods. Signaling through prices is studied when an entrant s quality is (i) private information; and (ii) common information of entrant and incumbent. When consumers visit a store, they observe quality and can switch before purchasing. When switching costs are low, an entrant can signal high quality by setting a sufficiently high price; consumers who find out that quality is low switch to the incumbent. Entry may be facilitated when switching costs are sufficiently low, or when the incumbent knows the entrant s type.

Strategic delegation of responsibility in competing firms

This paper investigates the strategic impact of organizational design on product market competition. In a duopoly model of horizontal and vertical product differentiation, each firm's manager can impose a product location, or delegate responsibility to select product location to his subordinate. The task of a subordinate is to develop and produce the good. Quality is determined by his effort level, which depends on his private benefits. The managers compete on a product market by selling the goods produced by their subordinates. Conditions for existence of equilibria are derived, and implications for management strategy are discussedOligopoly;Competition;Product Differentiation;Organizational Structure;Corporate Strategy;business economics

Technological change in markets with network externalities

Technological Change;Externalities

Strategic delegation of responsibility in competing firms

This paper investigates the strategic impact of organizational design on product market competition. In a duopoly model of horizontal and vertical product differentiation, each firm's manager can impose a product location, or delegate responsibility to select product location to his subordinate. The task of a subordinate is to develop and produce the good. Quality is determined by his effort level, which depends on his private benefits. The managers compete on a product market by selling the goods produced by their subordinates. Conditions for existence of equilibria are derived, and implications for management strategy are discussed

Essays in industrial organization and management strategy

Abstract: This thesis contains five essays in the theory of industrial organization and management strategy. An introduction makes the main ideas accessible to non-specialists by presenting the essays as fictitious cases. The first essay investigates strategic disclosure of verifiable information. The disclosed information concerns a hidden action, and the transmission of information takes place in a noisy environment. The second essay explores how search costs and informational asymmetries influence the possibilities for entry in markets for search goods. The model that is used analyzes signaling with common information. The third essay presents a principal-agent model in which the agent enjoys working. The principal, instead of designing a pecuniary incentive scheme, can appeal to the agent's private benefits by giving him a say in the job the agent has to do. The fourth essay applies this idea in order to study the strategic impact of organizational structure. Possible linkages between internal organization and market strategy are highlighted. The last essay focuses on the prices selected by a monopolist who sells a durable good and repairs it in the case of breakdown. The monopolist can circumvent inefficiencies by inviting a competitor in the repair market or by leasing the good instead of selling it.

Delegation of responsibility in organizations

Delegation;Production Management;Econometric Models;Organizational Behaviour

Aftermarkets: The monopoly case

Consider a monopolist who sells a durable good, and repairs the good if it breaks down. Suppose that contracts that specify future repair prices cannot be written, so that there is an aftermarket" situation. When consumers are risk-averse, the monopolist chooses inefficiently high repair prices; if complete warranties were possible, he would fully insure consumers by guaranteeing to repair the good at a zero fee. To increase efficiency, the monopolist may attract a rival firm in the aftermarket, or lease the good. The latter option restores first-best efficiencyMonopoly;Leasing;After Sales Service;Repair;microeconomics