Competitive Pressure: Competitive Dynamics as Reactions to Multiple Rivals

Competitive dynamics research has focused primarily on interactions between dyads of firms. Drawing on the awareness-motivation-capability framework and strategic group theory we extend this by proposing that firms’ actions are influenced by perceived competitive pressure resulting from actions by several rivals. We predict that firms’ action magnitude is influenced by the total number of rival actions accumulating in the market, and that this effect is moderated by strategic group membership. We test this using data on the German mobile telephony market and find them supported: the magnitude of firm’s actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to strategically similar rivals

Co-Opetition and Prelaunch in Standard-Setting for Developing Technologies

Firms faced with the decision of whether to standardize or not prior to introducing a new network technology face a tradeoff: Compatibility improves the technology's chances of consumer acceptance, but it also means having to share the resulting profits with other sponsors of the standard. In this paper, we show that even prior to market introduction of a new technology, the timing of decisions is important and that firms have to weigh up the cooperative and competitive elements of pre-market choices. We also show that the option to precommit to a technology before it is fully developed (as has been the case with the Compact Disc) can be profitable for network technologies.Standardization, compact disc, preemption, war-of- attrition

Competitive Pressure: Competitive Dynamics as Reactions to Multiple Rivals

Competitive dynamics research has focused primarily on interactions between dyads of firms. Drawing on the awareness-motivation-capability framework and strategic group theory we extend this by proposing that firms’ actions are influenced by perceived competitive pressure resulting from actions by several rivals. We predict that firms’ action magnitude is influenced by the total number of rival actions accumulating in the market, and that this effect is moderated by strategic group membership. We test this using data on the German mobile telephony market and find them supported: the magnitude of firm’s actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to strategically similar rivals.Competitive rivalry; competitive dynamics; strategic groups; mobile telecommunications

Usage and Diffusion of Cellular Telephony, 1998-2004

In this paper, we study the dynamics of usage intensity of second-generation cellular telephony over the diffusion curve. We address two specific questions: First, does information about usage intensity over time allow us to draw conclusions about the underlying drivers of technology diffusion? Seconds, what effect does the existence and penetration of previous generations and other networks in the same generation on network usage intensity? Using an operator-level panel covering 41 countries with quarterly data over 6 years, we find that heterogeneity among adopters dominates network effects and that different technological generations are complements in terms of usage, but substitutes in terms of subscription. ZUSAMMENFASSUNG - (Gebrauch und Infusion von Mobilfunktelefonie, 1998-2004) In diesem Beitrag untersuchen wir die Dynamik der Gebrauchsintensität von Mobilfunktelekommunikation zweiter Generation (D-Netzwerk in Deutschland) in verschiedenen Phasen ihrer Marktdiffusion. Wir stellen zwei spezifische Fragen: Erstens, kann man an Hand der Informationen über die Gebrauchsintensität die zugrundeliegenden Treiber der Technologiediffusion identifizieren? Zweitens, welche Auswirkung haben die Existenz und die Marktdurchdringung der vorherigen Generationen und andere Netzwerke derselben Generation auf die Gebrauchsintensität eines Mobilfunknetzwerks? Mittels der Paneldaten auf Netzwerkbetreiberebene, die 41 Nationen vierteljährlich über 6 Jahre umspannen, finden wir, dass die Abonnentenheterogenität die Netzwerkeffekte dominiert. Außerdem stellt sich heraus, dass die unterschiedlichen Technologiegenerationen bezüglich der Gebrauchsintensität komplementär zueinander sind, jedoch bezüglich ihrer Subskription Substituten darstellen.Cellular telephony, diffusion, network effects, consumer heterogeneity, fixed-mobile substitutability

Increasing Dominance - the Role of Advertising, Pricing and Product Design

Despite the empirical relevance of advertising strategies in concentrated markets, the economics literature is largely silent on the effect of persuasive advertising strategies on pricing, market structure and increasing (or decreasing) dominance. In a simple model of persuasive advertising and pricing with differentiated goods, we analyze the interdependencies between ex-ante asymmetries in consumer appeal, advertising and prices. Products with larger initial appeal to consumers will be advertised more heavily but priced at a higher level - that is, advertising and price discounts are strategic substitutes for products with asymmetric initial appeal. We find that the escalating effect of advertising dominates the moderating effect of pricing so that post-competition market shares are more asymmetric than pre-competition differences in consumer appeal. We further find that collusive advertising (but competitive pricing) generates the same market outcomes, and that network effects lead to even more extreme market outcomes, both directly and via the effect on advertising.Increasing dominance; persuasive advertising; duopoly; network effects

Market leadership through technology – Backward compatibility in the U.S. Handheld Video Game Industry

The introduction of a new product generation forces incumbents in network industries to rebuild their installed base to maintain an advantage over potential entrants. We study if backward compatibility moderates this process of rebuilding an installed base. Using a structural model of the U.S. market for handheld game consoles, we show that backward compatibility lets incumbents transfer network effects from the old generation to the new to some extent but that it also reduces supply of new software. We examine the tradeoff between technological progress and backward compatibility and find that backward compatibility matters less if there is a large technological leap between two generations. We subsequently use our results to assess the role of backward compatibility as a strategy to sustain market leadership

Private Regulation by Platform Operators – Implications for Usage Intensity

Platforms operators act as private regulators to increase usage and maximize profits. Their goals depend on the development of the platform: overcoming the chicken-egg problem early on requires attracting platform participants while quality becomes more important later on. Private regulators influence third-party business models, entry barriers, and usage intensity. We analyze how drivers of usage intensity on Facebook’s application platform were affected by a policy change that increased quality incentives for applications. This change led to the number of installations of each application becoming less important, applications in more concentrated sub-markets achieving higher usage, and applications staying attractive for longer

Backward Compatibility to Sustain Market Dominance – Evidence from the US Handheld Video Game Industry

The introduction of a new product generation forces incumbents in network industries to rebuild their installed base to maintain an advantage over potential entrants. We study if backward compatibility can help moderate this process of rebuilding an installed base. Using a structural model of the US market for handheld game consoles, we show that backward compatibility lets incumbents transfer network effects from the old generation to the new to some extent but that it also reduces supply of new software. We also find that backward compatibility matters most shortly after the introduction of a new generation. Finally, we examine the tradeoff between technological progress and backward compatibility and find that backward compatibility matters less if there is a large technological leap between two generations. We subsequently use our results to assess the role of backward compatibility as a strategy to sustain a dominant market position

Incentives for Quality over Time – The Case of Facebook Applications

We study the market for applications on Facebook, the dominant platform for social networking and make use of a rule change by Facebook by which high-quality applications were rewarded with further opportunities to engage users. We find that the change led to quality being a more important driver of usage while sheer network size became less important. Further, we find that update frequency helps applications maintain higher usage, while generally usage of Facebook applications declines less rapidly with age

Maternal High Fat Nutrition is Associated with Placental Dysfunction: Insight in Pathophysiology and Potential Mechanisms

The prevalence of overweight (BMI >25 kg/m²) and obesity (BMI >30 kg/m²) are increasing on a global scale, and as a consequence, obesity among women of reproductive age has also increased within the last decades. Obesity before and during pregnancy is associated with a higher risk for the mother and the unborn child to develop pregnancy related complications, including gestational diabetes and disturbed fetal growth. Abnormal fetal growth has been linked to placental dysfunction and can translate into childhood and adolescence health issues, resulting in high socio-economic costs. Obesity and pregnancy are both linked to a state of increased inflammation and oxidative stress, which in case of pregnancy may be relevant to initiate the birth process at the end of pregnancy, but concomitant with obesity, can also attribute to placental dysfunction. The placenta provides essential tasks during pregnancy in both oxygen and nutrient supply, as well as waste removal and contributes to the success of pregnancy also by the production of hormones. In order to properly fulfill its function, placental cell homeostasis, structure and vascularization are of tremendous importance. However, it is still not fully understood how maternal obesity (MO) affects placental cells and processes like vascularization and placental transfer capacity. Therefore, we aimed to decipher the effects of MO on the placental feto-maternal transfer zone which constitutes the interface for transport of oxygen, nutrients and removal of waste products between maternal and fetal circulation. In order to address these questions, we induced obesity in C57BL/6N mice via feeding a high fat diet (HFD) after weaning until the end of the experiment and collected serum, placentas and epigonadal white adipose tissue (egWAT) for analyses at various gestation days (E11.5, E15.5 and E18.5). Lean mice, receiving a standard diet (SD), served as control. We discovered that in obese dams, gestation was prolonged for about 1 day compared to lean dams, and speculate that this might be due to a reduced leukocyte-infiltration of placentas and pro-inflammatory factor expression in egWAT of obese dams compared to lean dams shortly before parturition (E18.5). Furthermore, in our mouse model of maternal obesity, embryos of obese dams developed an intrauterine growth restriction (IUGR) at the beginning of the third trimester of gestation (E15.5). At the same time, protein and mRNA level of endothelial cell (EC) marker were reduced in placentas, and stereological analysis revealed impaired vascularization in placentas of obese dams. This was accompanied by increased EC senescence in the transfer zone of placentas under MO. We also found elevated interleukin-6 (IL-6) level in maternal serum and observed a trend towards an increase in IL-6 mRNA and protein level in egWAT of obese dams compared to controls, suggesting this tissue as the source of elevated circulating IL-6 level. In cell culture assays using human placental EC, we then confirmed that stimulation with IL-6 can induce senescence, suggesting a link between elevated serum IL-6 level, placental EC senescence and impaired placental vasculature. Based on the findings regarding IL-6 induced EC senescence in vitro and altered placental vascularization in vivo, we subjected obese dams to an anti-IL-6 signaling antibody therapy. We found that under this therapy, placental IL-6 protein level were elevated and down-stream signaling marker level seemed reduced, which indicates successful IL-6 signaling blockade. However, antibody therapy did not prevent lower fetal weight at E15.5, and placental vascular marker level were reduced compared to obese controls without antibody therapy. In summary, anti-IL-6 signaling therapy may not alleviate HFD-induced defects in placental vascularization and IUGR, and warrants further investigation with additional dosing. Proteomic profiling of the feto-maternal transfer zone moreover revealed a reduced level of the adherens junctions (AJ) marker E-cadherin in obese compared to lean dams at E15.5. This was confirmed in whole placenta lysates of obese compared to lean dams concomitant with a strong tendency towards reduced β-catenin level, an intracellular adaptor protein of AJ. These changes persisted until the end of pregnancy (E18.5) in placentas of obese dams, while at mid-gestation (E11.5) we could not observe altered AJ marker level. In addition, it was found that at E15.5 the ultrastructure and cell homeostasis in the transfer zone were affected by MO, as demonstrated by defective syncytial fusion and a disrupted basement membrane. In functional assays we then showed that passive transfer across the placenta was significantly increased under MO, while active glucose transport was unaltered at E15.5. Moreover, our in vitro studies suggest that fatty acids, present in excess in our HFD, can alter trophoblast cell layer permeability and cause reduced β-catenin level. Collectively, these findings strongly suggest that MO causes disruptions in the feto-maternal transfer zone via disturbed EC and trophoblast homeostasis, leading to a “leaky” placental barrier while embryos develop an IUGR. A healthy lifestyle with limited intake of fatty acids and prevention of obesity in women of childbearing age could therefore, in case of pregnancy, support proper placental function and reduce the risk of fetal growth restriction