Input Production Joint Venture

In many industries it is quite common to observe firms delegating the production of essential inputs to independent ventures jointly established with competing rivals. The diffusion of this arrangement and the favourable stance of competition authorities call for the assessment of the social and private desirability of Input Production Joint Ventures (IPJV), which represent a form of input production cooperation, not investigated so far. IPJV can be seen as an intermediate organizational setting lying between the two extremes of vertical integration and vertical separation. Our investigation is based on an oligopoly model with horizontally differentiated goods. We characterize the conditions under which IPJV is privately optimal finding that firms’ incentives may be welfare detrimental. We also provide a rationale for the empirical relevance of IPJV both in terms of its ability to survive and in terms of disengagement incentives.Input Production Joint Venture, Horizontal Differentiation, Oligopoly

Compatibility choice in vertically differentiated technologies

We analyse firms' incentives to provide two-way compatibility between two network goods with different intrinsic qualities. We study how the relative importance of vertical differentiation with respect to the network effect influences the price competition as well as the compatibility choice. The final degree of compatibility allows firms to manipulate the overall differentiation. Under weak network effect, full compatibility may arise: the low quality firm has higher incentives to offer it in order to prevent the rival from dominating the market. Under strong network effect we observe multiple equilibria for consumers' demands. However, in any equilibrium of the full game, coordination takes place on the high quality good which, we assume, always maintains its overall quality dominance.compatibility, vertical differentiation, network effect.

Compatibility Choice in vertically differentiated technologies

We analyse firms’ incentives to provide two-way compatibility between two network goods with different intrinsic qualities. We study how the relative importance of vertical differentiation with respect to the network effect influences the price competition as well as the compatibility choice. The final degree of compatibility allows firms to manipulate the overall differentiation. Under weak network effect, full compatibility may arise : the low quality firm has higher incentives to offer it in order to prevent the rival from dominating the market. Under strong network effect we observe multiple equilibria for consumers’ demand. However, in any equilibrium of the full game, coordination takes place on the high quality good which, we assume, always maintains its overall quality dominance.compatibility, vertical differentiation, network effect

Market integration in network industries

What is the effect of product market integration on the market equilibrium in the presence of international network externalities in consumption? To address this question, we set up a spatial two-country model and we find that the economic forces at work may have an ambiguous effect on prices.compatibility, horizontal differentiation, network effect

Unions' relative concerns and strikes in wage bargaining

We consider a model of wage determination with private information in a duopoly. We investigate the effects of unions having relative concerns on the negotiated wage and the strike activity. We show that an increase of unions' relative concerns has an ambiguous effect on the strike activity.relative position, wage bargaining, private information, strike activity

Market integration and network industries

What is the effect of product market integration on the market equilibrium in the presence of international externalities in consumption ? To address this question, we set up a spatial two-country model and we find that the economic forces at work may have an ambiguous effect on prices.compatibility; horizontal differentiation; network effect

Bargaining and delay in patent licensing

We consider a model of licensing of a non-drastic innovation in which the patent holder (an outside innovator) negotiates either up-front fixed fees or per-unit royal- ties with two firms producing horizontally differentiated brands and competing à la Cournot. We investigate how licensing schemes (fixed fee or per-unit royalty) and the number of licenses sold (exclusive licensing or complete technology diffusion) affect price agreements and delays in reaching an agreement. We show that the patent holder prefers to license by means of up-front fixed fees except if market competition is mild and the innovation size is small. Once there is private information about the relative bargaining power of the parties, the patent holder may prefer licensing by means of per-unit royalties even if market competition is strong. Moreover, the delay in reaching an agreement is greater whenever the patent holder chooses to negotiate up-front fixed fees instead of per-unit royalties.patent licensing, fixed fee, royalty, bargaining, private information

Market integration in network industries

What is the effect of product market integration on the market equilibrium in the presence of international network externalities in consumption? To address this question, we set up a spatial two-country model and we find that the economic forces at work may have an ambiguous effect on prices.

A note on acquisition of complements in a vertically differentiated market

This note is concerned with the effects of joint ownership of complements when they are vertically differentiated. We provide strong arguments for the positive nature of network integration among firms, while showing at the same time that, in some circumstances, anti-competitive consequences can be observed under acquisition

Revealing incentives for vertical integration in the presence of glocal policies

Local and regional policy makers are acquiring an increasingly active role in affecting firms’ specialization decisions that in turn influence firms’ vertical organization. We analyse the relation between vertical integration incentives and trade liberalization in the presence of glocal policies, i.e., specific (local) policies that have international (global) impact. More precisely, one of the most important reasons for vertical integration in the presence of sunk costs of specialization is avoiding the risk of hold up. We introduce the idea that this sunk cost can be manipulated by the policy maker at national/regional/local level. We characterize the conditions under which policies are effective in achieving a particular equilibrium in terms of vertical structure and specialization decision. The main result is that the policy effectiveness is stronger the higher is the importance of the hold-up problem. In particular, we investigate how glocal policies interact with policies that affect the market openness (trade policy). We find that for high values of the specialization upgrade cost, trade policies are ineffective. At the same time, if the trading cost is very low, glocal policies are ineffective. Finally, in the presence of intermediate specialization upgrade and trading cost, either policy supplements the other policy