2 results found
Harutyunyan M, Jiang B, 2019, The Bright Side of Having an Enemy, Journal of Marketing Research, Vol: 56, Pages: 679-690, ISSN: 0022-2437
<jats:p> Conventional wisdom suggests that more intense competition will lower firms’ profits. The authors show that this may not hold in a channel setting with exclusive retailers. They find that a manufacturer and its retailer can both become worse off if their competing manufacturer and retailer with quality-differentiated products exit the market. Put differently, in a channel setting, more intense competition can be all-win for the manufacturer, the retailer, and the consumers. Interestingly, a high-quality manufacturer can benefit from an increase in its competitor’s perceived quality (e.g., due to favorable product reviews from consumers or third-party rating agencies). In other words, a manufacturer may prefer a strong rather than a weak enemy, and the manufacturer can have an incentive to help its competitor improve product quality or remain in the market. Furthermore, the authors show that a multiproduct monopolist manufacturer with an exclusive retailer may make higher profits by spinning off a product into a competing manufacturer that has its own retail channel, even without accounting for any proceeds from the spinoff. </jats:p>
Harutyunyan M, Jiang B, 2017, Strategic Implications of Keeping Product Value Secret from Competitor’s Customers, Journal of Retailing, Vol: 93, Pages: 382-399, ISSN: 0022-4359
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