Price competition with a stake in your rival
Mostra el registre complet Registre parcial de l'ítem
- dc.contributor.author Hervas-Drane, Andres
- dc.contributor.author Shelegia, Sandro
- dc.date.accessioned 2023-07-18T06:35:20Z
- dc.date.available 2023-07-18T06:35:20Z
- dc.date.issued 2022
- dc.description.abstract We examine how revenue-sharing and profit-sharing stakes affect price competition intensity under duopoly. Our analysis builds on the price competition framework introduced by Varian (1980) and accounts for fundamental asymmetries in terms of cost and consumer loyalty. A stake exists when a firm appropriates a share of its rival’s revenues or profits. For example, a marketplace owner that charges a third-party seller an ad valorem fee on its sales has a revenue-sharing stake, and a firm holding a minority ownership participation in another has a profit-sharing stake. We show that a revenue-sharing stake always has a stronger competition-dampening effect (leads to higher prices) than a profit-sharing stake, and explain how the introduction of a stake affects the intensity of competition between firms. Our analysis generates new insight into how stakes affect competitive interaction in the marketplace.
- dc.format.mimetype application/pdf
- dc.identifier.citation Hervas-Drane A, Shelegia S. Price competition with a stake in your rival. Int J Ind Organ. 2022;84:102862. DOI: 10.1016/j.ijindorg.2022.102862
- dc.identifier.doi http://dx.doi.org/10.1016/j.ijindorg.2022.102862
- dc.identifier.issn 0167-7187
- dc.identifier.uri http://hdl.handle.net/10230/57603
- dc.language.iso eng
- dc.publisher Elsevier
- dc.relation.ispartof International Journal of Industrial Organization. 2022;84:102862.
- dc.rights © 2022 The Authors. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by/4.0/
- dc.subject.keyword Revenue-sharing
- dc.subject.keyword Ad valorem fees
- dc.subject.keyword Profit-sharing
- dc.subject.keyword Cross-ownership
- dc.subject.keyword Price dispersion
- dc.title Price competition with a stake in your rival
- dc.type info:eu-repo/semantics/article
- dc.type.version info:eu-repo/semantics/publishedVersion