Price and service competition with maintenance service bundling

In many equipment manufacturing industries, firms compete with each other not only on products price, but also on maintenance service. More and more traditional products oriented firms are offering their customers products bundled with maintenance service (P&S bundles). In this study, we examine firms’ incentive to offer customers products bundling with long-term maintenance or repair support service in a duopoly competitive environment. When providing P&S bundles, a firm need to determine the service level (in terms of average response time guarantee for the service in this paper) to offer and needs to build a service facility to handle the maintenance service requirements. Based on the analysis of three sub-game models, we characterize the market conditions in which only one firm, both firms or neither firm will offer P&S bundles. Finally, we analyze the affects of several market factors on firms’ strategy choices

Innovation and Crowdsourcing Contests

In an innovation contest, an organizer seeks solutions to an innovation-related problem from a group of independent agents. Agents, who can be heterogeneous in their ability levels, exert efforts to improve their solutions, and their solution qualities are uncertain due to the innovation and evaluation processes. In this chapter, we present a general model framework that captures main features of a contest, and encompasses several existing models in the literature. Using this framework, we analyze two important decisions of the organizer: a set of awards that will be distributed to agents and whether to restrict entry to a contest or to run an open contest. We provide a taxonomy of contest literature, and discuss past and current research on innovation contests as well as a set of exciting future research directions

European Electricity Market Reforms: Any Signs of Efficiency Improvements?

This paper investigates whether European electricity market refirms have induced any changes infirm efficiency either through productive, allocative or dynamic efficiency improve- ments. In particular, this ex-post analysis looks closely at productivity e ects of changing industry structure, ownership structure and regulation with respect to barriers to entry and access to wholesale and retail markets. Based on the Europeanfirm-level data for the period 1996-2007, the results indicate sluggish productivity improvements of European electricityfirms due to refirms implemented in the last decade. In particular, productivity gains are associated with high-productivityfirms close to the technology frontier, while no signi cant impact is found for the laggards. Looking from a dynamic perspective, it seems that the clos- est are thefirms to the frontier the more they are able to improve productivity in response to liberalization e orts stimulating competition

The all-pay-auction with complete information

In a (first price) all-pay auction, bidders simultaneously submit bids for an item. All players forfeit their bids, and the high bidder receives the item. This auction is widely used in economics to model rent seeking, R&D races, political contests, and job promotion tournaments. We fully characterize equilibrium for this class of games, and show that the set of equilibria is much larger than has been recognized in the literature. When there are more than two players, for instance, we show that even when the auction is symmetric there exists a continuum of asymmetric equilibria. Moreover, for economically important configurations of valuations, there is no revenue equivalence across the equilibria; asymmetric equilibria imply higher expected revenues than the symmetric equilibrium

The manufacturer's value chain as a service - the case of remanufacturing

Manufacturing enterprises globally have already largely adopted the product-service strategy into their operations. However, due to gradual commoditization of services, manufacturing enterprises will have to further extend this strategy. One possibility is for manufacturers to servitize, not only their final products, but also a part of their value chain, with the aim of increasing their long-term competitive advantage. In this article, the application of servitization to remanufacturing, as a set of operational and business competences and processes, is conceptualized. By offering remanufacturing as a service, manufacturers will create an additional revenue stream. The synergies created from integrating remanufacturing into an enterprise with a product-service system are scrutinized. The impact of offering remanufacturing as a service (servitizing) is then assessed from the perspective of the competitive advantage of both, the provider and the consumer of the service. Three main sets of implications are identified. The first is that the integration of remanufacturing into a product-service system could increase customer satisfaction through a larger service scope and higher service quality, while decreasing operational costs. Furthermore, it is shown that the higher the level of servitization, the stronger is the positive impact of remanufacturing. The second set of results shows that servitizing remanufacturing can substantially increase the competitive advantage of both the provider and the consumer. While the first two sets of results have industrially oriented implications, the third set constitutes a theoretical contribution through the proposal and conceptual validation of extension of the application of servitization theory. Finally, while the reasoning is of a conceptual nature, it is based on established theories and includes remanufacturing-related industrial cases as a basis for assessment

Voting for Direct Democracy: Evidence from a Unique Popular Initiative in Bavaria

We analyze a constitutional change in the German State of Bavaria where citizens, not politicians, granted themselves more say in politics at the local level through a constitutional initiative at the state level. This institutional setting allows us to focus on revealed preferences for direct democracy and to identify factors which explain this preference. Empirical results suggests support for direct democracy is rather related to dissatisfaction with representative democracy in general than with an elected governing party

Vertical Separation as a Defense against Strong Suppliers

We provide a simple model to investigate decisions about vertical separation. The key feature of this model is that more than one input is required for the final product of the downstream monopolist. We show that as the bargaining powers of independent complementary input suppliers grow larger, the downstream monopolist tends to separate from its input units. The results are related to a visible difference between the vertical structures of Japanese and US auto assemblers

Understanding Interorganizational Learning Based on Social Spaces and Learning Episodes

Different organizational settings have been gaining ground in the world economy, resulting in a proliferation of different forms of strategic alliances that translate into a growth in the number of organizations that have started to deal with interorganizational relationships with different actors. These circumstances reinforce Crossan, Lane, White and Djurfeldt (1995) and Crossan, Mauer and White (2011) in exploring what authors refer to as the fourth, interorganizational, level of learning. These authors, amongst others, suggest that the process of interorganizational learning (IOL) warrants investigation, as its scope of analysis needs widening and deepening. Therefore, this theoretical essay is an attempt to understand IOL as a dynamic process found in interorganizational cooperative relationships that can take place in different structured and unstructured social spaces and that can generate learning episodes. According to this view, IOL is understood as part of an organizational learning continuum and is analyzed within the framework of practical rationality in an approach that is less cognitive and more social-behavioral