Search

We provide a new reason for Bertrand‐Cournot profit reversal. In a symmetric oligopoly, we show that firms get higher profits under Bertrand competition compared to Cournot competition under non‐commitment process innovation if the products are sufficiently differentiated and there is positive knowledge spillover. As the number of firms increases, the degree of product differentiation over which the profits are higher under Bertrand competition can increase. Higher outputs under Bertrand competition compared to Cournot competition generate higher R&D investments under the former than the latter, which is responsible for our result. [ABSTRACT FROM AUTHOR]

We discuss horizontal mergers in a homogeneous good industry where firms compete à la Bertrand with increasing marginal production costs. We show that profitable mergers can occur even for lower post-merger prices with respect to the pre-merger scenario, thus implying an increase in consumer surplus. The driving force of the result is the ability of the merged entity cutting production costs by sharing the output among its plants. This output rationalization effect can compensate for the revenue loss due to the merged entity producing less than the cumulated pre-merger production of the merging parties. • Mergers can be profitable for lower post-merger prices compared to the pre-merger case. • They can increase consumer surplus without creating any merger-induced synergy. • They can be profitable and welfare enhancing in a coalition proof market structure. [ABSTRACT FROM AUTHOR]

We study how private intellectual property rights protection affects equilibrium prices in a duopoly competition between firms that offer a product variety of distinct qualities (vertical product differentiation) in a setup that is closely related to that put forward by Jain where firms offer the same qualities in equilibrium (horizontal product differentiation). Consumers may make a choice to buy a legal version, use an illegal copy (if they want to and can), or not use a product at all. Using an illegal version violates intellectual property rights protection and is thus punishable when discovered. Thus, both private and public (copyright) intellectual property rights protection are available on scene. [ABSTRACT FROM AUTHOR]

Based on a licensing model where a licensor (an innovator) is itself a producer in the product market, this research investigates the endogenous timing of setting a quantity (price) under unit-royalty licensing, fixed-fee licensing, and two-part tariff licensing contracts. We demonstrate that the results of equilibrium timing depend on the various payment terms of a licensing contract as well as the innovation size. For the fixed-fee licensing contract, both firms play a simultaneous game under Cournot competition and play a sequential game under Bertrand competition. In contrast, both firms play a sequential game under Cournot competition and play a simultaneous game under Bertrand competition when the innovator licenses via a unit-royalty licensing contract and the innovation size is relatively large. [ABSTRACT FROM AUTHOR]

We study price-cap regulation in a market in which a vertically integrated upstream monopolist sells an essential input to a downstream competitor. In the absence of regulation, entry benefits both firms, but may harm downstream consumers because the upstream monopolist can set a high input price that would push downstream prices above the unregulated monopoly level. However, if a regulator caps the incumbent's upstream and downstream prices, consumers and firms are better off after entry than under a price-cap monopoly. We extend our model to examine the concern that price caps may induce incumbents to forgo cost-reducing investments and dampen entrants' incentives to self-provision the input. [ABSTRACT FROM AUTHOR]

In this paper I examine price competition between two sellers who sequentially arrive at an online consumer-to-consumer market: e.g., Craigslist. Each seller has one unit of a homogeneous good that she wants to sell to a pool of buyers. When buyers arrive randomly at the market, I show that there is a unique equilibrium, in which sellers choose different prices and earn the same profit. When buyers' arrival positively correlates with their valuations, an additional equilibrium outcome has sellers choose almost the same prices but with the second-arriving seller earning a higher profit. I discuss how these results relate to the environment of traditional markets analyzed in Hviid (1990). [ABSTRACT FROM AUTHOR]

Consumer choice behaviour is important in the product line optimisation problem. The extant literature on product line optimisation is mostly based on traditional consumer choice models, such as the multinomial logit and multinomial probit models. These models either assume that the utility errors are independent from irrelevant alternatives (IIA) or are limited by complex calculation processes or pre-given, specific distributions of measuring errors. The marginal moment model (MMM), which is classified as a semiparametric choice model, does not require specific distributions of errors; thus, it can overcome the IIA shortcoming. This study focuses on the concavity of the profit functions of a product line optimisation model based on MMM. We prove that the profit function based on MMM is concave in market share under a monopoly or oligopoly. Numerical experiments show that the choice probabilities obtained from the MMM, multinomial logit, and multinomial probit models are similar although they are obtained under different assumptions. Experimental results under monopolistic, Cournot, and Bertrand competition based on MMM are compared. Some interesting managerial insights are summarised based on the sensitivity analysis of the various model parameters. [ABSTRACT FROM AUTHOR]

Since (Reny in Econometrica 67:1029–1056, 1999) a substantial body of research has considered what conditions are sufficient for the existence of a pure strategy Nash equilibrium in games with discontinuous payoffs. This work analyzes a general Bertrand game, with convex costs and an arbitrary sharing rule at price ties, in which tied payoffs may be greater than non-tied payoffs when both are positive. On this domain, necessary and sufficient conditions for (i) the existence of equilibrium (ii) the uniqueness of equilibrium are presented. The conditions are intuitively easy to understand and centre around the relationships between intervals of real numbers determined by the primitives of the model. [ABSTRACT FROM AUTHOR]

The study aims to re-examine the results of quantity and price competition. I consider a vertically related market where one upstream firm sequentially contracts with two downstream firms. I find that consumer surplus and social welfare under quantity competition can be higher than those under price competition. Under price competition with sequential contracting, an upstream firm offers a high wholesale price to a downstream firm contracted later, to help a downstream firm contracted earlier. The downstream firm contracted earlier anticipates this and sets a high retail price. Because prices are strategic complements, the downstream firm contracted later also sets a high retail price. Hence, competition in the downstream sector is softer under price competition, and the rankings of consumer surplus and social welfare can be reversed. [ABSTRACT FROM AUTHOR]

A numerical procedure capable of obtaining the equilibrium states of oligopoly markets under several assumptions is presented. Horizontal and vertical product differentiation were included by taking into account Euclidean distance in a two-dimensional space and quality characteristics of the product. Different quality preferences of consumers were included in the model. Firms implement two strategies in the market: profit maximization and market share maximization. Numerical discretization of a two-dimensional area was performed for computing the equilibrium prices which allows one to consider any market area and any location of the firms. Four scenarios of oligopoly markets were developed by combining both strategies from one side and competitive behavior and a partial cartel agreement from another side. The main differences between the scenarios are outlined. Profits, market shares and equilibrium prices are presented and compared. The influence of collusion, the existence of participants with a market share maximization strategy and consumer preferences on the firm's profits and equilibrium prices were examined. Cases whereby firms prefer to leave the cartel were investigated. Best locations for the setting of a new store for profit maximization are shown and discussed. [ABSTRACT FROM AUTHOR]

There are studies regarding monopolistic all-unit quantity discount but we add the duopoly Bertrand competition under incomplete information with it, which is not treated earlier. Then, a systematic procedure is outlined to compute pay-off functions for the developed game. A real numerical example is given in support of the solution procedure and a sensitivity analysis is carried out to examine the important parameters on the equilibrium quantities. This study provides several interesting insights. For instance, it is approved that if retailers know each other completely or not, under some special conditions, rejecting the offered discount is the strictly dominant strategy adopted by the retailers. By doing sensitivity analysis for a real-world case, it is displayed that for maximizing profit, the company should pay more attention to increasing the demand rather than reducing the costs. It could be seen that a change in the value of all parameters except the fixed ordering cost and the holding cost rate results in changing the discount strategy selected by the retailers. Investigating an incomplete information in comparison with the common knowledge case, it is necessary that retailers obtain more accurate knowledge about their rivals. [ABSTRACT FROM AUTHOR]

Problem definition: It is common practice for firms to deploy strategies based on customer segmentation (by clustering customers into different segments) and price discrimination (by offering different prices to different customer segments). Price discrimination, although seemingly beneficial, can hurt firms in competitive environments. Academic/practical relevance: It is thus critical for firms to understand when to engage in price discrimination and how to support discriminatory pricing practices with appropriate inventory management strategies. This paper tackles this overarching question through operational lenses by studying the joint impact of price discrimination and the allocation of limited inventory across customer segments. Methodology: We develop a Bertrand competition game featuring capacity restrictions, quality differentiation, and customer heterogeneity. Results: We characterize (pure- or mixed-strategy) Nash equilibria for a single-stage game reflecting uniform pricing and for a two-stage inventory-price game reflecting discriminatory pricing along with endogenous inventory allocation. Managerial implications: We identify three sources of market friction in price competition enabling firms to earn higher profits: capacity limitations, quality differentiation, and customer heterogeneity. Price discrimination eliminates the market frictions from customer heterogeneity, but strategic inventory allocation restores (or strengthens) the market frictions from capacity limitations. As such, price discrimination is only beneficial when combined with optimal inventory allocation across segments. We discuss relevant real-world examples featuring regional price discrimination along with strategic inventory allocation, including fast fashion and vaccines. Otherwise, uniform pricing may outperform discriminatory pricing. Our results thus underscore the critical role of inventory allocation in the design of competitive pricing strategies. Funding: This research was partially supported by the National Natural Science Foundation of China [Grant 71821002]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.1146. [ABSTRACT FROM AUTHOR]

We revisit the endogenous determination problem of strategies for each firm in a duopoly market. Particularly, we focus on the scenario wherein each firm behaves as a Kantian duopoly. In a Kantian duopoly with substitutes, we demonstrate that Bertrand competition can be uniquely observed in equilibrium if each firm's marginal cost is high relative to any degree of homogeneity between goods produced by each firm. Conversely, Cournot competition can also be observed in equilibrium if its marginal cost is low relative to degree of homogeneity. Conversely, in a Kantian duopoly with complements, we demonstrate that the two asymmetric market structures relative to each rim's strategy can be observed in equilibrium if its marginal cost is high relative to the degree of homogeneity. Cournot competition, however, can also be observed in equilibrium. Furthermore, in a Kantian duopoly, we find that the area of the degree of homogeneity and each firm's marginal cost such that the equilibrium market structure(s) can coincide with the socially preferable market structure(s) is larger when the goods are complements than when they are substitutes. Consequently, in a Kantian duopoly, each firm's free determination of its strategy should be permitted rather when the goods are complements than when goods are substitutes. [ABSTRACT FROM AUTHOR]

This paper advances Motta's (2004) study of two-firm Bertrand mergers with arbitrary synergies in symmetric linear models to m -firm mergers with cost-savings in asymmetric linear models. It identifies a set of Bertrand mergers that reduce not only consumer surplus but also rival firms' profits. Such severely anti-competitive mergers are intriguing because they can never happen in both Farrell and Shapiro (1990) and Nocke and Schutz (2018). • It advances Motta's (2004) two-firm mergers to m-firm with non-arbitrary synergy. • It finds a set of mergers that reduce both consumer surplus and outsiders' profits. • It provides simplified and previously unavailable expressions of equilibria. [ABSTRACT FROM AUTHOR]

We examine the online retailer's selling mode choice under different competition forms in an online retailing supply chain. Four models based on two selling modes (i.e., agency selling and direct selling) and two competition forms (i.e., Bertrand and Cournot) are constructed, and the conditions for the online retailer to choose the optimal selling mode are identified. The results show that the online retailer's optimal choice of selling mode is mainly affected by the direct selling cost under Bertrand competition, whereas it is affected jointly by the direct selling cost, competition intensity, and commission rate under Cournot competition. Additionally, in the direct selling mode, both the online retailer and platform can obtain more profits under Cournot competition; however, in the agency selling mode, the online retailer can benefit from Bertrand competition when the commission rate is moderate, and Cournot competition otherwise. Finally, the effects of competition intensity, commission rate, and direct selling cost on the profits of the online retailer and platform are investigated by numerical analysis. [ABSTRACT FROM AUTHOR]

By allowing the supplier to contract simultaneously or sequentially with asymmetric retailers under Bertrand competition, we analyze the welfare implications of banning price discrimination in input markets. In contrast to Cournot competition, we find that: (i) under sequential contracting, the monopolistic supplier prefers to contract with an inefficient retailer first and an efficient retailer later; and (ii) when comparing consumers' surplus and social welfare under simultaneous and sequential contracting with uniform pricing (resp. price discrimination), consumers' surplus and welfare are smaller (resp. greater) in sequential contracting than in simultaneous contracting. However, the supplier always prefers simultaneous contracting over sequential contracting under Bertrand competition; and thus sequential contracting does not occur. And, in simultaneous contracting, consumer surplus and total welfare are higher for uniform pricing than price discrimination. [ABSTRACT FROM AUTHOR]

We examine price competition with homogeneous products in the presence of general common ownership arrangements allowing for different corporate control structures. We show that equilibria with positive profits exist (including the monopoly outcome) when the manager places the same weight on the profit of her firm as on the average profit of all the other firms. This condition supports symmetric and asymmetric stakes and can arise as an equilibrium of a network formation game or a bargaining process. [ABSTRACT FROM AUTHOR]

Previous studies on horizontal outsourcing between competing duopolists emphasize cost factors, such as economies of scale and/or variable cost advantages in Cournot markets, as potential explanations. Our paper studies horizontal outsourcing when two competing firms engage in Bertrand competition, and highlights the important role of sole sourcing commitment. We adopt the framework of a multistage duopoly game that comprises of an incumbent and an entrant. The incumbent has the capability to make a key component in‐house, and the entrant, who is a rival of the incumbent in the downstream market, can source the component from either the incumbent or a supplier not participating in the end‐product market. We find that if the entrant commits to sole sourcing, horizontal outsourcing can occur when the incumbent has a component cost advantage or even a small cost disadvantage over the alternative supplier. Specifically, if the component cost gap is small, horizontal outsourcing may soften downstream market competition and benefit both firms at the expense of inducing higher prices for the consumers. If the incumbent has a significant cost advantage, horizontal outsourcing may lead to an increased downstream price war by expanding the total supply of end products. Without sole sourcing commitment, horizontal outsourcing occurs only when the incumbent has a cost advantage, and it always strengthens downstream price competition. By contrast, if the firms engage in downstream Cournot competition, sole sourcing commitment has no impact on the adoption of horizontal outsourcing, and the entrant sources from her rival only when the incumbent enjoys a significant cost advantage. Finally, we also study various extensions to check and confirm the robustness of our main results to key model assumptions. [ABSTRACT FROM AUTHOR]

This paper studies Bertrand–Edgeworth competition among firms producing a homogeneous commodity under efficient rationing and constant (and identical across firms) marginal cost until full capacity utilization is reached. Our focus is on a subset of the no pure‐strategy equilibrium region of the capacity space in which, in a well‐defined sense, some firms are large and the others are small. We characterize equilibria for such subset. For each firm, the payoffs are the same at any equilibrium and, for each type of firm, they are proportional to capacity. While there is a single profile of equilibrium distributions for the large firms, there is a continuum of equilibrium distributions for the small firms: what is uniquely determined, for the latter, is the capacity‐weighted sum of their equilibrium distributions and hence the union of the supports of their equilibrium strategies. [ABSTRACT FROM AUTHOR]

In this study, we revisit the endogenous choice between price and quantity contracts in a duopoly composed of asymmetric firms engaged in corporate social responsibility (CSR) with possibly biased managers. We find that Cournot competition can change to an equilibrium competition structure regardless of the degree of homogeneity between the goods produced by them and the degree of importance of their CSR. Furthermore, we show that Bertrand competition, in addition to Cournot competition, can be observed in equilibrium when the degrees of importance of CSR between firm owners are sufficiently asymmetric with each other. This result is supported by the manipulation of the types of managers with respect to the biased scale of the demand size in the market by their owners when the degree of importance of their CSR changes. [ABSTRACT FROM AUTHOR]

A numerical procedure capable of obtaining the equilibrium states of oligopoly markets under several assumptions is presented. Horizontal and vertical product differentiation were included by taking into account Euclidean distance in a two-dimensional space and quality characteristics of the product. Different quality preferences of consumers were included in the model. Firms implement two strategies in the market: profit maximization and market share maximization. Numerical discretization of a two-dimensional area was performed for computing the equilibrium prices which allows one to consider any market area and any location of the firms. Four scenarios of oligopoly markets were developed by combining both strategies from one side and competitive behavior and a partial cartel agreement from another side. The main differences between the scenarios are outlined. Profits, market shares and equilibrium prices are presented and compared. The influence of collusion, the existence of participants with a market share maximization strategy and consumer preferences on the firm’s profits and equilibrium prices were examined. Cases whereby firms prefer to leave the cartel were investigated. Best locations for the setting of a new store for profit maximization are shown and discussed.

Inspired by new technologies to monitor parking occupancy and process market signals, we aim to expand the application of demand-responsive pricing in the parking industry. Based on a graphical Hotelling model wherein each garage has information for its incoming parking demand, we consider a general competitive spatial pricing in parking systems under an asymmetric information structure. We focus on the impact of urban network structure on the incentive of information sharing. Our analyses suggest that the garages are always better off in a circular-networked city, while they could be worse off in the suburbs of a star-networked city. Nevertheless, the overall revenue for garages is improved and the aggregate congestion is reduced under information sharing. Our results also suggest that information sharing helps garages further exploit the customers who in turn become worse-off. Therefore, policy-makers should carefully evaluate their transportation data policy since impacts on the service-providers and the customers are typically conflicting. Using the SFpark data, we empirically confirmed the value of information sharing. In particular, garages with higher price-demand elasticity and lower demand variance tend to enjoy larger benefits via information sharing. These insights support the joint design of parking rates structure and information systems. [ABSTRACT FROM AUTHOR]

In this paper we consider, on one hand, a differentiated Cournot model, and, on the other hand, a differentiated Bertrand model, when one of the firms engages in an R&D process that gives an endogenous cost-reducing innovation. The aim of the present paper is two-fold. The first is to study the licensing of the cost-reduction by a per-unit royalty and a fixed-fee in these Cournot and Bertrand models. The second is to do a direct comparison between Cournot model and Bertrand model. We analyse the implications of these types of licensing contracts over the R&D effort, the profits of the firms, the consumer surplus and the social welfare. We show that some previous results for two-part tariff licensing are not robust, in the sense that they can be not true for just either a per-unit royalty contract or a fixed-fee contract. Furthermore, by using comparative static analysis, we conclude that the degree of the differentiation of the goods assumes a great importance in the results. We also discuss the optimal licensing, meaning that which licensing method is preferred, in each of the duopoly models considered. [ABSTRACT FROM AUTHOR]

We look at a Bertrand model in which each firm may be unreliable with random yield, so the total quantity brought into market is uncertain. Under mild conditions, the Bertrand model with random yield has a unique Nash equilibrium, in which the prices and production quantities are determined by each firm’s production cost and reliability. In the case of symmetric firms, we compare Bertrand competition with Cournot competition by numerical examples, and find that Bertrand competition yields lower prices and less profits than Cournot competition. Furthermore, in the case of symmetric firms with 0–1 yields, we explicitly show that Bertrand competition yields lower prices and less profits than Cournot competition, and the comparison between the quantities of Bertrand and Cournot competition is dependent on the value of reliability. When the reliability is high, Cournot competition yields less quantities than Bertrand competition. Otherwise, the other hand holds. [ABSTRACT FROM AUTHOR]

We study the price competition in the U.S. packaged salads market by testing two price competition hypotheses: Bertrand competition versus sequential pricing model. The former is standard for oligopoly pricing in the IO literature. The latter provides a formal mechanism for second-mover, price-undercutting behaviour by private-label brands, owned by mainstream supermarkets, that grew their market share dramatically in the second half of the 2000s. Applying Vuong and Gasmi (1991)'s test, we show that observed market prices and market shares fit best to Bertrand competition. [ABSTRACT FROM AUTHOR]

We compare the equilibria under Bertrand and Cournot competition in the spatial barbell model where spatial barriers and process R&D are involved. We show that when the market becomes more competitive by switching from Cournot to Bertrand competition, R&D investment may increase (decrease) depending upon a low (high) transport rate. Next, we find that under Cournot competition total output, consumer surplus, and welfare are higher, but profit is lower than is true for Bertrand competition, when the transport rate is high, which overturns the traditional result. [ABSTRACT FROM AUTHOR]

In this article we prove the existence of classical solutions to a system of mean field games arising in the study of exhaustible resource production under market competition. Individual trajectories are modeled by a controlled diffusion process with jumps, which adds a nonlocal term to the PDE system. The assumptions on the Hamiltonian are sufficiently general to cover a large class of examples proposed in the literature on Bertrand and Cournot mean field games. Uniqueness also holds under a sufficient restriction on the structure of the Hamiltonian, which in practice amounts to a small upper bound on the substitutability of goods. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to investigate the impact of heterogeneous beliefs about market demand on the profitability of firms under different competitive settings. To this end I consider a differentiated duopoly model where two firms with different beliefs about the market demand can compete in quantity (Cournot competition) or in price (Bertrand competition). The results show that the optimistic firm can outperform the pessimistic firm in profits under Cournot competition even in the state of Low demand as long as the ratio of High demand over Low demand is sufficiently low. Under Bertrand competition, however, if the ratio of High demand over Low demand is sufficiently low or the overall optimism of the two firms is sufficiently high, the pessimistic firm can gain higher profit than the optimistic one even when demand is high. [ABSTRACT FROM AUTHOR]

The imperfect decision-making of human buyers participating in retail markets varies from fundamental models that assume rational economic choices: even in markets with identical items human buyers are not rational, i.e., buyers do not always choose the cheapest option. Recent developments in artificial intelligence and e-commerce enable market participation by software agents that are (almost) perfectly rational due to their computational capacity. However, the increasing degree of buyers' rationality might have unfavorable effects on retail markets with regards to the competition between sellers and the resulting prices. In this paper, we study the effects of varying degrees of buyers' rationality on the competition and the prices buyers face in retail markets with identical items. We use the multinomial logit function to model different degrees of buyers' rationality. We further model the competition between sellers using k-level reasoning: each seller computes the price to offer (best response strategy) with regards to its belief for the competition. First, we derive an analytical best response strategy (price) of a seller given the competing prices and the degree of buyers' rationality, and show that there exists an optimal degree of buyers' rationality that minimizes the price. Last, we use evolutionary game theory to show that perfect rationality leads to unstable competition dynamics increasing the overall cost for buyers. In contrast, bounded rationality leads to smoother dynamics and lower cost for buyers. Our insights raise the need to revisit design objectives for software agents in retail markets in light of their wider systematic impact. [ABSTRACT FROM AUTHOR]

Past farm subsidy research has identified the occurance of subsidy incidence to only a single input factor market (land). We expand subsidy incidence literature to a partial equilibrium two-stage dynamic game between a price-taking buyer and two Bertrand complementary input suppliers. The buyer (farmer) is the target of the government subsidy. We find that a coupled subsidy results in higher input prices for both the affiliated coupled factor (land) and its nonaffiliated complementary factor (e.g. seed). Sector welfare and welfare distribution are highly influenced by input demand complementarity. Surplus for the receiver of the coupled subsidy increases as inputs become closer complements,while aggregate surplus distribution increasingly favors the input suppliers. However, increases in sector growth from coupled subsidies (mulitplier effect) increases as inputs become closer complements. Therefore, policy aimed at mitigating subsidy incidence may reduce sector growth. [ABSTRACT FROM AUTHOR]

This article investigates how firms compete when they have the ability to set a personalized price to those consumers they can profile and a uniform price to those consumers they cannot profile; how this affects the incentives to supply data analytics to firms; and what, if any, policy recommendations can be provided. Two duopolists compete on price in the market for a homogeneous product. They can "profile" consumers, that is, identify their valuations with some probability. If both firms can profile consumers but with different abilities, then they achieve positive expected profits at equilibrium. This provides a rationale for firms to (partially and unequally) share data about consumers or for data brokers to sell different customer analytics to competing firms. Consumers prefer that both firms profile exactly the same set of consumers or that only one firm profiles consumers as this entails marginal cost pricing (so does a policy requiring list prices to be public). Otherwise, more protective privacy regulations have ambiguous effects on consumer surplus. [ABSTRACT FROM AUTHOR]

We show that Bertrand competition arises in equilibrium in the downstream market of a vertically related industry with bottleneck. The upstream monopolist offers fixed fee discounts to the downstream firms in order to motivate them to set prices , instead of quantities, in the final good market. This is in sharp contrast with the bulk of the literature in which Cournot competition is the equilibrium mode of competition. Bertrand competition is beneficial for all firms, but not for consumers and the society. • We consider a vertically related industry with upstream bottleneck. • The upstream supplier trades with the downstream firms via three part tariff contracts. • The upstream supplier motivates downstream firms to offer price instead of quantity contracts to final consumers via fixed fee discounts. • Bertrand competition arises as the equilibrium mode of competition. • Firms are better-off, but consumers and the society as a whole are worse-off. [ABSTRACT FROM AUTHOR]

It is usually believed that the presence of labour unions is detrimental for the consumers since it raises wages. We show that this view may not be true if we endogenize the impacts of labour unions on firms' corporate strategies such as merger and acquisition. The presence of labour unions may benefit the consumers by deterring merger. [ABSTRACT FROM AUTHOR]

In the past, implementing delivered pricing has been perceived as unrealistic because of practical difficulties in distinguishing between customers, determining an individual's willingness to pay, and setting different prices to individuals. The rise of e-commerce has introduced the possibility of doing all three. Competitive location with delivered pricing was studied by Lederer and Hurter (1986) but only with inelastic customer demand. This paper extends the literature by allowing price elastic demand. A Nash equilibrium with inelastic demand always exists but examples show that it may not with price elasticity. General sufficient conditions guaranteeing existence of a Nash equilibrium are developed despite the fact that even with these conditions a firm's profit function is generally not concave, quasi-concave, supermodular or even continuous in location choices. Examples demonstrate how violation of sufficient conditions result in lack of existence. Given price elasticity, equilibrium locations demonstrate properties unlike the inelastic case, for example, as transportation cost rises or firms' production costs rise, each firm locates closer to its competitor. Given our sufficient conditions for equilibrium's existence, the interval spanning firms' ordered equilibrium locations always contains a social welfare optimum pair and a social welfare optimum pair is always contained by an ordered equilibrium. [ABSTRACT FROM AUTHOR]

This paper studies evolution of firms' behavior in a networked Bertrand oligopoly market, in which firms who are located on vertices of a network compete in price with their neighbors. This network model is also applied to a market with multi-dimensionally differentiated products. In a non-networked market, it is known that the Bertrand–Nash equilibrium pricing is evolutionarily stable. We show, however, that in our large networked market, the Bertrand–Nash equilibrium price is not stable but a collusive price is evolutionarily stable under weak selection. As the magnitude of transportation cost increases, firms charge a more collusive price in the long run. The results suggest that collusive pricing prevails in a large market if and only if it is networked. [ABSTRACT FROM AUTHOR]