Seeking Closure: Competition in Complementary Markets

Seeking Closure: Competition in Complementary Markets

A firm with a product that competes in a market that has a complementary product (in a different market) must consider the interdependence between the complementary products as well as the competition within markets. If the firm participates in both markets, the balancing act becomes even more challenging. This paper provides insights about strategies in this latter setting. When should the fir...

Price Competition in Markets with Consumer Variety Seeking

We show that the non-cooperative equilibrium in a two-period duopoly with consumer variety-seeking may be the same as the collusive outcome in an otherwise identical market without variety-seeking. Specifically, our variety-seeking model implies tacit collusion between firms in both periods, and not just in the second period only as in the switching-cost model of Klemperer (1987a, 1987b), which...

Competition in Corruptible Markets

Firms seeking business opportunities often face corruptible agents in many markets. This paper investigates the marketing strategy implications for firms competing for business, and for the buyer in a corruptible market. We consider a setting in which a buyer (a firm or government) seeks to purchase a good through a corruptible agent. Supplier firms that may or may not be a good fit compete to ...

Innovation in Complementary Internet Markets

Competition in complementary goods: Airport handling markets and Council Directive 96/67/EC

This paper addresses the case of complementary services with vertical relations. Using the example of airport handling activities, we develop a model to investigate the effects on welfare and competitiveness of four different handling market situations. We find out that the usual Cournot result on welfare when firms compete in complementary goods is verified unless there are efficiency gaps bet...