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This study examines the impacts of partial passive ownership (PPO) by a public enterprise on firm's research and development (R&D) decisions in the presence of research spillovers. We find that PPO always increases welfare in a mixed duopoly, while it only increases (decreases) welfare in a private duopoly when the spillover rate is high (low). We also show that privatisation policy can increase (decrease) welfare when both PPO and spillover rates are high (low) under R&D competition. In addition, we examine research joint ventures (RJVs) and find that welfares in both mixed and private duopolies under RJVs are always higher than those under R&D competition, while privatisation policy always increases welfare regardless of PPO and the organisational form of RJVs. Therefore, the effects of PPO by a public enterprise crucially depend not only on spillovers rate, but on the type of RJVs formation and the implementation of privatisation policy. [ABSTRACT FROM AUTHOR]

This study delved into the dynamics of cooperative sales promotion between a retail platform and its manufacturer suppliers. It was observed that retail platforms were increasingly inclined to collaborate with manufacturers on sales promotion initiatives, such as nationwide advertising campaigns, to enhance brand development. Adopting a differential game model, this paper investigated the retail platform's strategic decision regarding participation in cooperative promotions in scenarios ranging from monopoly to duopoly among manufacturers. The findings revealed that the platform's willingness to engage in cooperative promotions was significantly influenced by the commission fee, with the platform opting for such promotions only when the commission fee surpassed a critical threshold. Additionally, the study shed light on how the intensity of upstream competition shapes the platform's stance on cooperative promotions. Notably, the platform adopted a more lenient policy in a low-competition environment and a more stringent one in the face of heightened competition. This study contributed to the existing body of literature by addressing a gap in the understanding of cooperative promotion and advertising dynamics within the context of modern retail platforms and their supply chains, complementing the predominantly studied traditional reselling supply chains. [ABSTRACT FROM AUTHOR]

This study examines how personalized pricing affects customers' showrooming behavior in the duopoly competition with horizontal product differentiation between traditional and online retailers. For the available personalized pricing strategies, we obtained the optimal decisions for both retailers in the scenarios with and without showrooming. Our results indicate that adopting personalized pricing under particular conditions enables each retailer to be more profitable, even in the presence of showrooming purchases. This finding explains why an increasing number of online and offline retailers have implemented personalized pricing based on technical means and consumer purchase records. It is also demonstrated that personalized pricing can counter showrooming behavior of consumers amidst the competition between both retailers, which provides a novel theoretical basis for dealing with cross‐channel shopping in multichannel retail competition. We further clarify how retailers can avoid being trapped in a prisoner's dilemma when both sides have access to personalized pricing. Also, the adoption of personalized pricing can improve consumer surplus and social welfare. [ABSTRACT FROM AUTHOR]

Policies concerning subsidies for new energy vehicles and consumers' environmental preferences significantly impact the sales of such vehicles. To investigate the correlation between sales and subsidies or consumers' environmental preferences and to devise optimal subsidy strategies, two Stackelberg game models are constructed based on both monopoly and duopoly markets, with solutions derived for Nash equilibrium points. In order to refine the strategy for subsidy adjustments, two dynamic adjustment models considering bounded rationality are established. Additionally, the process of adjusting subsidies towards Nash equilibrium points is analyzed. Simulations, utilizing actual research data, are performed to assess China's current adjustment strategies. The findings reveal a substitution relationship between consumers' environmental preferences and subsidies. Furthermore, optimal subsidy levels and bounded rational subsidy adjustment strategies are identified. Governments should thoroughly consider consumers' environmental preferences when refining subsidy policies, as it is a crucial factor influencing the development of the new energy vehicle industry. [ABSTRACT FROM AUTHOR]

A prominent hallmark of competitive interaction is the desire to differentiate from rivals. In this article, the authors examine under what conditions firms will differentiate through product quality versus advertising intensity. Firms select quality in a first stage, advertising in a second stage, and price in the last stage. The probability that a consumer is informed of a firm's offering depends on its advertising expenditure. The authors find that when advertising is not cost effective, both firms choose a light ad spending. This allows them to minimally differentiate in quality without concern of intense price competition, as each firm has a segment of "captive" consumers. When advertising is moderately cost effective, one firm spends heavily on advertising. The rival advertises lightly, while choosing the same maximal quality level. This strategy softens price competition by inducing the heavy advertiser to price high more often to capitalize on its large captive segment. When advertising is very cost effective, both firms advertise heavily and differentiate in quality. Three extensions are examined: upfront fixed quality costs, continuous advertising levels, and simultaneous advertising and pricing decisions. This research reveals that letting market awareness be determined endogenously suggests less product differentiation than previously suspected and regions of advertising differentiation. [ABSTRACT FROM AUTHOR]

The politics of climate change in Australia remains highly fraught, this is despite the country experiencing acute impacts of a changing climate including mega-fires, floods, and severe and prolonged drought. Government inaction has led to limited market signals encouraging producers or consumers to move away from carbon intensive energy production to clean energy. In the absence of regulation, Australian shareholder activists are engaging directly with company boards and executives to reform corporate behaviour. This engagement, environmental, social, and governance (ESG) shareholder activism, has proliferated since 2017, much later than in comparable jurisdictions. Activists have targeted the mining, oil and gas, and finance sectors, due to their contribution to the Australian economy and their direct impact on global emissions. This paper explores the reasons for, and the implications of, the growth in ESG shareholder activism in Australia. It argues that the emergence of this activism in Australia was delayed due to complexities in the country's corporations' law. Regulatory attempts at stymying ESG shareholder activism resulted in the emergence of a duopoly of actors, at the cost of broader investor and civil society engagement. It is concluded that the rise of ESG shareholder activism in Australia is linked to growing tension between societal expectations, regulation, and the behaviour of firms. And, that ESG activists have been successful in leveraging this tension. There is evidence that large corporates have responded to activist claims, rendering this form of activism a potentially effective method for addressing some of the most pressing issues facing society. [ABSTRACT FROM AUTHOR]

Using double auction market experiments with both human and agent traders, we demonstrate that agent traders prioritising low latency often generate, sometimes perversely so, diminished earnings in a variety of market structures and configurations. With respect to the benefit of low latency, we only find superior performance of fast-Zero Intelligence Plus (ZIP) buyers to human buyers in balanced markets with the same number of human and fast-ZIP buyers and sellers. However, in markets with a preponderance of agents on one side of the market and a noncompetitive market structure, such as monopolies and duopolies, fast-ZIP agents fall into a speed trap. In such speed traps, fast-ZIP agents capture minimal surplus and, in some cases, experience near first-degree price discrimination. In contrast, the trader performance of slow-ZIP agents is comparable to that of human counterparts, or even better in certain market conditions. [ABSTRACT FROM AUTHOR]

We study the effects of three forms of taxation—a tax levied on the platform's revenue, an ad valorem tax on consumers' access fees and tax imposed on per‐transaction fees of sellers, in vertically differentiated two‐sided duopoly platforms with cross‐side network effects. The level of informative advertising which increases the probability of finding sellers by buyers, declines with taxes for each platform. Analytical comparison between tax regimes has been made. Additionally, for an increased degree of cross‐group externality, platforms raise the level of informative advertising irrespective of tax structures. [ABSTRACT FROM AUTHOR]

This research introduces sales delegation in a product innovation game by considering Cournot and Bertrand duopolies. The article first revisits the existing results with profit‐maximising firms, showing that a prisoner's dilemma with undifferentiated products cannot occur in a Bertrand rivalry setting. Then, by considering the separation between ownership and control, the work shows, when managers are delegated to choose only over quantity or price in the product market, that sales delegation (1) increases (resp. reduces) the likelihood to innovate (not to innovate) under Cournot competition, and (2) increases the likelihood to innovate under Bertrand competition compared to the profit‐maximising setting. Unlike this, if managers are delegated to choose over quantity or price in the product market and product innovation is in the decision‐making stage, sales delegation reduces the likelihood of innovation in both Cournot and Bertrand rivalry settings. Overall, results pinpoint the importance of the managerial delegation in affecting investments in product innovation compared to the profit‐maximising model. [ABSTRACT FROM AUTHOR]

Problem definition: For many information goods, longer publication cycles (or batches of information) are more economical, but often result in less timely—and, therefore, less valuable—information. Whereas the digitalization of publication processes has reduced fixed publication costs, making shorter publication cycles more economically viable, competing firms have adapted their publication cycles differently: some of them publish more frequently, whereas others publish less frequently. In the face of growing competition and digitalization, how should information providers change their publication frequency strategies? Methodology/results: In this paper, we build a game-theoretic model to determine how information providers should set their publication cycles and prices in a duopoly. We find that, compared with a monopolistic environment, competition gives rise to differentiation by cycles and expands product variety. Specifically, competing firms should seek to differentiate on their publication frequency when the fixed publication is high and their contents share a high degree of commonality, but not otherwise. Whereas a reduction in the fixed cost of publication tends to yield shorter publication cycles, it could also intensify the competitive dynamics, leading firms to further differentiate their publication cycles, hurting consumer surplus. However, this could be temporary, as firms may ultimately converge in their choices of publication cycles. Managerial implications: The digitalization of publication processes is disrupting many information provision industries (e.g., news, weather, financial). We show that competing firms should anticipate nonmonotone or abrupt changes in their publication strategy as their publication processes get digitalized and may actually be hurt—as well as consumers—in the process of digitalization. Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2023.0024. [ABSTRACT FROM AUTHOR]

We investigate the product positioning decisions of two firms that enter a market sequentially under a duopoly competition. Two important assumptions are made: differential marginal production costs between the two firms, and endogenous entry timing of a follower in a continuous-time setting. We analyze a standard location-pricing Hotelling game with quadratic transportation costs with the points of departure being that the two firms (i) are allowed to have different (constant) marginal costs; (ii) enter sequentially in a pre-determined order in a market in which the consumers are growing over time; and (iii) are not restricted to choosing positions inside the interval in which consumer preferences are located. For the first mover, the dynamic market growth can give rise to a trade-off between exploiting short-run monopoly and long-run duopoly profits. This trade-off affects the equilibrium positions when the first mover has a larger marginal cost as well as a larger discount rate, in which case the first mover chooses its position at the center of the interval along which consumers are located. We also introduce uncertainty regarding entry and marginal costs to examine their effects on positioning and entry timing. If the entry cost of the follower firm is uncertain for the leader firm, then the leader firm is likely to choose its position farther away from the most attractive point. Moreover, we show that the follower firm enters the market earlier if the leader firm faces such uncertainty. [ABSTRACT FROM AUTHOR]

E-commerce platforms have an informational advantage over their third-party sellers, leading to the common belief that a platform's market entry would harm sellers with similar products. However, unlike traditional retail competition, the platform and its sellers have aligned incentives : the platform's commission depends on the seller's revenue, and sellers rely on the platform to strengthen their online presence. Hence, the platform has no incentive to enter the market to harm the seller's revenue severely. This paper introduces a duopoly model where the seller is the "incumbent" and the platform is the "potential entrant". Our model captures two salient features: (a) the "reputation effect" that enables the platform to obtain a higher consumer valuation than the seller, and (b) the "spillover effect" that expands the market size when an additional entity (e.g., the platform) enters the market. Our equilibrium analysis debunks the prevailing belief about platform's entry, showing that platform's entry can enable both the platform and the seller to obtain a higher profit when the unit cost is sufficiently low and the spillover effect is sufficiently high. For robustness checks, we consider three different extensions: an alternative duopoly model with reversed roles where the platform is the incumbent and the seller is the potential entrant, a scenario with an endogenously determined spillover effect, and a simultaneous market entry/exit decision-making process. We find a consistent result across all three extensions that both seller and platform entries can mutually benefit under similar market conditions, fostering a symbiotic relationship. [ABSTRACT FROM AUTHOR]

Ever-increasing data consumption and evolving technologies make cooperation on investments and network sharing crucial issues in mobile telecommunications markets. In this paper, we analyze incentives for cooperation and investment in product quality. Generalizing quality investment in a Hotelling duopoly model, we allow investment to have heterogeneous effects on consumers' changing demand responsiveness to prices. If the effect of investment on demand elasticity is weak, consumer surplus and total welfare are higher when firms are prevented from cooperating on quality investment. Otherwise, firms should be allowed to jointly decide on quality improvements and share these improvements as long as they compete in the downstream markets. [ABSTRACT FROM AUTHOR]

Large volumes of online product reviews generated by customers have important strategic values for new product development. We consider a duopoly setting where two manufacturers aim to develop their own new products and services. Applying a differential game framework, we examine how online customer reviews can be leveraged as external knowledge for manufacturers to develop new products. In our base models, we assume that the products supplied by the manufacturers are homogenous. First, we consider a closed innovation setting as a benchmark case in which both manufacturers develop new products by their internal R&D without leveraging online customer reviews. Second, we propose a model in which one manufacturer leverages online customer reviews as external knowledge, while the other manufacturer only relies on internal R&D effort. We derive analytical equilibrium solutions to both models. We find that when one manufacturer uses online customer reviews, if the manufacturer's R&D process becomes more effective in improving its new product performance or reducing its cost, it certainly hurts the other manufacturer, but it may sometimes hurt this particular manufacturer as well. Furthermore, we demonstrate that when the manufacturer utilizes online customer reviews more in R&D, both manufacturers' profits can either increase or decrease. In an extended model, we relax the product homogeneity assumption and obtain the equilibrium solution analytically. We show that main managerial insights still hold in the extend model. [ABSTRACT FROM AUTHOR]

Theoretical research in marketing has traditionally focused on centralized brand‐extension strategies where a brand expands its product offerings by controlling the design, production, marketing, and sales of new products "in‐house." However, luxury brands frequently use "brand licensing" as a decentralized brand‐extension strategy under which a brand licenses its brand name to an "external licensee" that designs, produces, and sells the new product. Licensing is a time‐efficient and cost‐effective brand‐extension strategy for luxury brands to reach out to their aspirational, low‐end consumers ("followers") who value a brand more when more high‐end consumers ("snobs") purchase the brand's primary product (i.e., "positive popularity effect"). On the other hand, over‐licensing might dilute the brand for snobs who value brand exclusivity (i.e., "negative popularity effect"). We develop a game‐theoretic model to study luxury brand licensing in a decentralized setting by incorporating these two countervailing forces. First, in the monopoly setting (a benchmark), we find that the monopoly brand should license only when the negative popularity effect is not too high, and it should prefer "royalty licensing" over "fixed‐fee licensing" when the negative popularity effect is intermediate. Second, to explicate our analysis, we study the duopoly setting under fixed‐fee contracts. In contrast to the monopoly setting, we find that fixed‐fee licensing can "soften" price competition between brands so that licensing is "always" profitable for both brands under competition. Interestingly, in equilibrium under fixed‐fee contracts, competing brands face a prisoner's dilemma and both brands prefer not to license in some cases, even though both would be better off if they could commit to fixed‐fee licensing. Finally, we expand our analysis of the duopoly model by incorporating royalty licensing in addition to fixed‐fee licensing. We find that, in contrast to fixed‐fee licensing, royalty licensing can "intensify" price competition so that both brands have to lower their prices. Consequently, when the positive popularity effect is sufficiently strong, fixed‐fee licensing "dominates" royalty licensing. We also show that, under competition, luxury brands should adopt royalty licensing contracts only when the follower market is large and positive and negative popularity effects are small enough. [ABSTRACT FROM AUTHOR]

Beginning with two Hotelling duopolies where demand for the product in each market is independent of demand for the product in the other, the paper examines the price, profit and welfare consequences that result when first one firm in a market merges with a firm in the other market creating a single two-product firm and then the remaining two firms merge – resulting in a duopoly of two-product firms. The paper demonstrates how to compute the equilibrium in each market structure. Assuming that firms cannot commit not to use all the pricing instruments at their disposal, mixed bundling by two-product firms emerges following each merger. While such behavior is a unilateral best response, the equilibrium consequences of these choices end up lowering total profits and welfare compared to the pre-merger markets suggesting that the opportunity to engage in mixed bundling cannot be the sole motivation for such mergers. [ABSTRACT FROM AUTHOR]

We study fragmentation of equity trading using a model of imperfect competition among exchanges. In the model, increased competition drives down trading fees. However, additional arbitrage opportunities arise in fragmented markets, intensifying adverse selection. Due to these opposing forces, the effects of fragmentation are context dependent. To empirically investigate the ambiguity in a single context, we estimate key parameters of the model with order-level data for an Australian security. According to the estimates, the benefits of increased competition are outweighed by the costs of multi-venue arbitrage. Compared with the prevailing duopoly, we predict the counterfactual monopoly spread to be 23% lower. [ABSTRACT FROM AUTHOR]

This paper revisits horizontal mergers in an international oligopoly with differentiated goods under the segmented market assumption. In particular, we focus on an industry composed of firms that engage in their Kantian optimization. Strikingly from the case of each firm's Nashian optimization, we show that a duopoly with two international mergers can be uniquely observed in equilibrium except for a full monopoly, and the highest total social welfare can be achieved in its equilibrium market structure. In addition, we consider the managerial delegation cases from the viewpoints of two types of each firm's Kantian optimization. [ABSTRACT FROM AUTHOR]

This paper studies how the consumer's anticipated regret affects the firms' pricing decisions and profits in a duopoly market. I consider a two-period game with differentiated durable products, where an incumbent sells a basic version over two periods, and an entrant releases an improved version in period 2, of which the improved features are difficult to assess by the consumers. This ambiguity will lead to regret. This paper focuses on two types of regret: a consumer may regret purchasing in period 1 instead of purchasing in period 2 (action regret); a consumer who waited until period 2 might regret not buying in period 1 (inaction regret). The consumers can anticipate the possible regret, which will influence the consumer's decision-making. The results show that both types of anticipated regret may increase or decrease the incumbent's profit. In contrast, action (inaction) regret always benefits (harms) the entrant. Besides, the analysis indicates that the improved version's quality may either strengthen or weaken the impact of regret. Moreover, this paper examines the robustness of the results under different setups. [ABSTRACT FROM AUTHOR]

Inspired by the so‐called polluter pays principle, environmental taxes can drive a more sustainable European market. However, unilateral mitigation measures can reduce the competitiveness of carbon‐intensive industries, thereby inducing relocation. In this paper, we wonder whether a tax can effectively curb emissions without hurting firms. Our analysis's entry point is that the level of emissions in a region is jointly determined by (i) the number of consumers buying dirty goods and (ii) the environmental quality of these products. Thus, to curb emissions, on the one hand, firms have to reduce their goods' emissions intensity. On the other hand, consumers have to reduce the consumption of dirtier goods. This leads to defining a tax depending on the number of consumers buying the brown products and the relative quality of these products. We show that under this tax, lower emissions do not come at the expense of lower profits. [ABSTRACT FROM AUTHOR]

This paper introduces political competition into a vertical model with successive duopolies. The upstream consists of a home state-owned enterprise (SOE) and foreign private intermediate-input producer while the downstream consists of home and foreign private final-good producers. The SOE manager lobbies for a better weight configuration comprised of profits and sales, the downstream domestic firm lobbies for more subsidies to enhance its profits and industrial policy, and the policymaker, as one agency, maximizes a weighted sum of the lobbyists' contributions and social welfare, sets policies for the two firms. The paper shows that it is in the interest of the SOE's manager to promote sales at the expense of profits. The upshot on the effects of lobbying is that the government will set too high a weight on sales for the SOE and will confer excessive subsidy to the downstream firm beyond the respective social optimal levels. Lobbying is therefore socially harmful. This paper further shows that if only one lobbyist contributes, which results in lower social welfare than when only its rival contributes, it must be that the lobbyist contributes more than its rival. [ABSTRACT FROM AUTHOR]

We consider dynamic pricing and demand learning in a duopoly with multinomial logit demand, both from the perspective where firms compete against each other and from the perspective where firms aim to collude to increase revenues. We show that joint‐revenue maximization is not always beneficial to both firms compared to the Nash equilibrium, and show that several other axiomatic notions of collusion can be constructed that are always beneficial to both firms and a threat to consumer welfare. Next, we construct a price algorithm and prove that it learns to charge supra‐competitive prices if deployed by both firms, and learns to respond optimally against a class of competitive algorithms. Our algorithm includes a mechanism to infer demand observations from the competitor's price path, so that our algorithm can operate in a setting where prices are public but demand is private information. Our work contributes to the understanding of well‐performing price policies in a competitive multi‐agent setting, and shows that collusion by algorithms is possible and deserves the attention of lawmakers and competition policy regulators. [ABSTRACT FROM AUTHOR]

This paper explores how social interactions among consumers shape markets. In a two‐country model, consumers meet and exchange information about the quality of the goods. As information spreads, demand evolves, affecting the prices and quantities manufactured by profit‐maximizing firms. We show that market prices with informational frictions reach the duopoly price with full information at the limit. However, this convergence can take different paths depending on the size asymmetry between countries. In particular, when the country producing the low‐quality good is relatively large, the single market does not immediately turn into a duopoly and can be temporarily trapped in a situation of price instability where no Nash equilibrium in pure (but only in mixed) strategies exists and prices can fluctuate between their monopoly and duopoly levels. It follows that the classical price‐reducing effects of international trade may take longer to appear. In view of an intense globalization process, understanding how social meetings affect market outcomes is critical for understanding the performance of international economic integration. [ABSTRACT FROM AUTHOR]

This paper considers asymmetric performance evaluation measures in a duopoly with asymmetric costs and managerial delegation under quantity competition. Asymmetry along performance measures as well as cost leads to a several surprising results. First, we find that the social performance firm with a cost advantage earns a larger profit than its rival under a specific economic environment. Second, when the relative performance firm has the cost advantage, both firms adopt a less aggressive strategy under specific conditions, while the relative performance firm always earns a larger profit than its rival. [ABSTRACT FROM AUTHOR]

Research has focused predominantly on the influence of the language firms use in their announcements on the reactions of constituents such as shareholders and the media. We extend this research by examining a new form of linguistic construction––temporal framing—in the context of competitive interactions. Building on intertemporal choice theory, we theorized and tested how a focal firm's temporal framing of its competitive action announcements affects rivals' response speed. We examined three dimensions of temporal framing: temporal vagueness (lack of clarity and completeness regarding timelines), temporal distance (length of the action timeline: proximal versus distal), and frequency (repetition of vagueness and distance cues). Based on analysis of 2,130 competitive action press releases of 28 duopoly firms from 14 industries, we found that the temporal framing dimensions, both individually and interactively, were related to the response speed of rivals. Specifically, temporally vague and distally framed timelines in action announcements delayed rivals' response speed, and increased frequency of vagueness and distance cues strengthened these effects. This study explicates the linguistic underpinnings of competitive interactions and highlights the importance of temporal framing in the competitive context. [ABSTRACT FROM AUTHOR]

We consider a mixed duopoly service system with two service providers (SPs): one private and the other public. The public SP's objective is welfare maximization, whereas the private SP is profit driven. Customers are heterogeneous in terms of their quality tastes and choose from three options, namely, joining the private queue, joining the public queue, and balking (or taking an outside option). We first consider the scenario where the private SP provides a premium service and the public SP provides a regular service. Paradoxically, we find that although the public SP's objective is welfare maximization, welfare in the system can be less than that obtained with only profit-seeking private SPs. We further demonstrate that the maximum social welfare is achieved by partially privatizing the public SP, that is, by including both welfare and profit maximization as arguments in its objective function. In extreme cases in which the public SP's capacity is very small, fully privatizing the public SP can be socially desirable. We then consider the alternate setting where the public SP provides a premium service and the private SP provides a regular service and obtain similar conclusions. These findings, however, rely on the assumption that an outside option exists for balking customers, and one should be cautious in generalizing to no-balking situations. This paper was accepted by Jayashankar Swaminathan, operations management. Funding: W. Zhou was supported by the National Natural Science Foundation of China [Grants 71925002 and 71731006]. W. Huang acknowledges the financial support from the National Natural Science Foundation of China [Grants 71801096 and 72101090] and the Guangdong Basic and Applied Basic Research Foundation [Grant 2022A1515011983]. V. N. Hsu was supported by the General Research Fund of the Hong Kong Research Grants Council [Grant CUHK14526216]. P. Guo received financial support from the Hong Kong Research Grants Council [Grant 15502820]. Supplemental Material: The e-companion and data are available at https://doi.org/10.1287/mnsc.2022.4424. [ABSTRACT FROM AUTHOR]

We show that in finite settings with identical firms and consumers, asymmetric pure price equilibria with positive profits exist. We consider a price competition duopoly for a homogeneous product. Demand stems from a second-stage consumption game at posted prices, with consumers' behavior impacted by negative network effects. We characterize equilibrium prices and demand. In all subgame-perfect pure price equilibria, both firms have positive profits, and in some, firms charge different prices. [ABSTRACT FROM AUTHOR]

In this paper, we study the licensing of cost‐reducing innovations in a duopoly under supply function competition. We show that the innovator prefers fixed‐fee licensing to no licensing if its cost advantage is not extremely large. Moreover, if its cost advantage is not extremely small, the innovator prefers fixed‐fee licensing and mixed licensing to revenue‐royalty licensing. This second result arises only because of our assumption that the cost functions are quadratic. We show that if the cost functions are linear and royalty payments are per unit of output, the innovator strictly prefers royalty licensing to fixed‐fee licensing. We also show that in our model, consumer surplus is remarkably higher under any type of licensing than under no licensing. However, revenue‐royalty licensing is slightly superior for consumers to the other two types of licensing and only so if the cost advantage of the innovator is sufficiently large. [ABSTRACT FROM AUTHOR]

In this paper, we model a fully covered duopoly market in which two firms offer a differentiated information product that exhibits positive network effects and a complementary premium service to consumers. For each firm, there are two marketing strategies: the freemium strategy and the bundling strategy. We find that, under the market equilibrium, a firms' decision whether to employ the freemium strategy or not depends largely on the quality of the information product compared to its rival. When the information product quality is similar and the products' intrinsic values are sufficiently large, both firms will be better off by adopting the freemium strategy, while the bundling strategy will prevail if the products' intrinsic values are sufficiently small. Additionally, when the magnitude of complementary effects or network effects exceeds a given threshold, both firms' profit can be enhanced by an increase in the degree of product complementarity or in the intensity of network effects. We also demonstrate that a firm can benefit from an increasing market size only if the intrinsic value of its information product is sufficiently large. Finally, we extend our model to the uncovered market and derive the equilibrium prices and profits. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of manufacturing–marketing conflict in a vertically differentiated market where consumers differ in their willingness to pay. We model the competition between duopoly firms in quality and quantity dimensions. When the manufacturing and marketing managers within a firm cannot be perfectly coordinated, they bargain with each other to arrive at a compromise solution regarding quality and quantity decisions. We find that compared to the perfectly coordinated scenario, the high‐end firm is always worse off in the compromise scenario while the low‐end firm may benefit from this conflict by closing the quality gap with the high‐end firm. [ABSTRACT FROM AUTHOR]

This paper shows how minimax regret sheds new light on an old economic topic, market-exit games. It focuses on wars of attrition, namely overcrowded duopoly markets where the strategic variable is the exit time. The only symmetric Nash equilibrium (NE) of the game studied is a mixed-strategy equilibrium that leads to a null expected payoff, i.e., the payoff a firm gets when it immediately exits the market. This result is not convincing, both from a behavioral and from a strategic viewpoint. The minimax regret approach that builds upon opposite regrets — exiting the market too late and exiting the market too early — is more convincing and ensures that both firms obtain a strictly positive expected payoff. Highlights Minimax regret behavior sheds new light on the optimal exit-times in overcrowded markets. Minimax regret behavior provides a new behavioral content to mixed strategies. In overcrowded duopolies, if the firms' aim consists in minimizing regrets, then they get better payoffs than in the mixed-strategy NE. [ABSTRACT FROM AUTHOR]

We consider a duopoly with cost asymmetry and demand uncertainty and show that rivalry in (process) R&D can be extremely harmful to both firms even in the presence of spillovers if the firms produce under supply function competition. However, if they produce under Cournot competition, firms can earn higher profits in the presence of R&D rivalry than what they could earn when they (mutually) invested in no R&D. We also show that R&D rivalry always works to widen the efficiency gap between the firms under Cournot competition, and also under supply function competition if R&D spillovers are present. On the other hand, consumers’ welfare is affected by R&D rivalry only under supply function competition. Under this competition, consumers always prefer the presence of R&D rivalry with or without spillovers to the absence of R&D rivalry; however, they obtain their highest surplus under R&D rivalry when there are no R&D spillovers. [ABSTRACT FROM AUTHOR]

Remanufacturing can exert positive economic and environmental effects, but factors such as competition and governmental regulations influence its development. In this paper, we investigated the impact of environmental taxes on manufacturers' production decisions in three cases of a duopoly, in which remanufacturing was not conducted or conducted by one or two of the manufacturers. Based on game theory, the firm's remanufacturing decision was discussed in cases when only one manufacturer was capable of remanufacturing and both were capable of remanufacturing. Analysis results showed that the benefits from the remanufacturing production cost and competition were the most critical trade-off components. We further analyzed how manufacturers' decisions affected the environment. The environmental impact was measured by the total emissions, and relevant advice was provided to the regulator. Finally, assessments of numerical examples were performed using assumed values of the parameters to verify our results without loss of generality. [ABSTRACT FROM AUTHOR]

This paper investigates the combined effect of horizontal partial shareholding and dual purpose concern on quantity competition. We identify the type of acquiring firm on production quantity, consumer surplus, and social welfare. The results show that the combined effect may accelerate competition or mitigate competition, which depends on the trade‐off between the competition‐softening effect of horizontal partial shareholding and competition‐intensifying effect of dual purpose concern. Whether the consumer and society benefit from the combined effect also depends on the magnitude of horizontal shareholding and socialresponsibility preference. [ABSTRACT FROM AUTHOR]

This study considers a differentiated duopoly, including domestic and foreign enterprises, in trade, analyzes the impacts of product differentiation and productivity variance on equilibrium results, and explores the optimal trade policy in different competition modes. We find that differentiated products can boost the supply of foreign enterprises in a Cournot competition. In a home‐leading Stackelberg duopoly, increasing tariffs decreases consumer surplus but improves the home country's social welfare. The optimum‐welfare tariff of a home‐leading Stackelberg duopoly cannot exceed that of the foreign‐leading Stackelberg duopoly. An easy or tight tariff policy can be optimal, depending on the parameters and duopoly modes. [ABSTRACT FROM AUTHOR]

When competing firms embark and explore a new market, two salient features are often observed. On the one hand, the firms need to improve their quality by accumulating more experience and climbing up the learning curve. On the other hand, their quality may jointly expand the brand awareness of all competing products. In this article, we study a two‐period duopoly price competition where firms can improve their quality based on the accumulated demand (learn‐by‐doing effect) and their potential market size is positively affected by both firms' quality levels (quality spillover effect). In addition, we investigate two pricing schemes, namely, committed pricing and dynamic pricing, and their impact on the equilibrium outcomes. Assuming the two firms are symmetric in every aspect, our main findings include the following. First, we establish the existence and uniqueness of the pure Nash equilibrium for the dynamic game under either pricing scheme, and show that firms always set a low price in the first period to leverage quality improvement. As the quality spillover effect gets stronger, firms tend to raise their first‐period price, leading to a lower individual quality improvement and a non‐monotonic impact on firms' profit. Moreover, we find that committed pricing scheme benefits the duopoly when the spillover effect is strong, otherwise dynamic pricing scheme brings more profits. Finally, we examine two asymmetric cases where the firms are different in certain attributes pertaining to their learning speed and the quality spillover strength. Our analysis shows that the findings in the symmetric case still hold qualitatively. Useful managerial insights are derived from these studies. [ABSTRACT FROM AUTHOR]

This paper considers revenge consumption and government vouchers directly provided to the consumers in a duopoly model of vertical product differentiation. We find that revenge consumption will raise consumer surplus and social welfare. The government issuing vouchers will further push up consumer surplus and social welfare; however, facing the wave of revenge consumption, the government purposely want to recover the slowdown economy caused by the pandemic spread‐out, should fully consider the quality difference of products and issue different discount rate voucher. For the producer, whether the government issuing vouchers increase firm's profit depends on the degree of revenge consumption and product differentiation. [ABSTRACT FROM AUTHOR]

The paper studies product bundling in a duopoly supply chain network under the influence of different power-balance structures, bundling decisions and advertising efforts on total supply chain profit. Mathematical models comprising two manufacturers and a single retailer are developed to capture the impact of bundling policy and advertisement strategy under three power-balance structures, namely Manufacturer Stackelberg, Retailer Stackelberg and Vertical Nash. Following game theory models and numerical examples, the study found that the total profit of the supply chain is undifferentiated under the manufacturer Stackelberg and Vertical Nash case in the manufacturer bundling and retailer bundling strategies. However, total supply chain profit under manufacturer bundling strongly dominates under retailer bundling in Retailer Stackelberg and Vertical Nash, and remains valid under multiple settings of market size, price elasticity and advertising elasticity. It is also found that manufacturer bundling is significantly affected by advertising effort compared to retailer bundling. The study contributes to the literature interfacing supply chain and marketing by studying bundling policy and advertising strategy simultaneously for homogenous products, under various power-balance structures and price competition. [ABSTRACT FROM AUTHOR]