Increase In Product Differentiation Research Articles

Technology R&D and sharing in carbon emission reduction in a duopoly

This study constructs a duopoly model considering technology R&D and technology sharing in carbon emission reduction, analyzes the market equilibrium results and the impacts of product differentiation, R&D costs and sharing charges in four cases, and analyzes firms' emission reduction technologies R&D decisions and technology sharing decisions by comparing. The results show that, in most cases, an increase in product differentiation can increase the two firms' profits. However, under price competition, the increase in product differentiation reduces Firm 2's profit; one firm's technology R&D decision is affected by the other, and it is also affected by R&D marginal cost and R&D fixed costs; sharing charges affect the achievement of technology-sharing agreements. When sharing charges are within a certain range, both firms achieve win-win results. Sharing emission reduction technology can improve social welfare and reduce environmental damage, which depends on sharing charges.

Quality and Product Differentiation: Theory and Evidence from the Mutual Fund Industry

We study product differentiation in the mutual fund industry. We design a model in which funds with heterogeneous perceived quality can choose their level of product differentiation. In equilibrium, high quality funds choose broad market designs (i.e., low differentiation) appealing to many investors, while low quality funds adopt niche designs (i.e., high differentiation) that investors either love or loath. Using as a measure of fund differentiation the degree of textual uniqueness of investment strategy description in fund prospectuses, we confirm empirically that funds with lower expected performance tend to differentiate more. We use the issuance of Morningstar rating to previously unrated funds as an exogenous shock to perceived quality to identify the economic mechanism. We find that funds receiving a low rating increase their product differentiation. The effect is mainly concentrated on funds run by small management companies, a feature associated with lower performance. This increase in product differentiation makes funds more likely to survive. It also has a market-level impact on the menu of funds available to investors.

Partial outsourcing from a rival: Quality decision under product differentiation and information asymmetry

Firms along with producing components in-house source some requirements from a supplier competing in the downstream market (encroachment). However, the supplier may strategically choose not to compete with the manufacturer (no-encroachment). In a stylized game-theoretic model, we characterize component quality decisions of the supplier, a two-part tariff contracting structure, and the market output decisions of both players. We focus on investigating the effect of product quality differentiation and partial outsourcing strategy on the above decisions. We find that product quality may increase or decrease with the increase in product differentiation. Further, we find that the increase in the fraction of requirements outsourced by the manufacturer to the supplier may increase or decrease the product quality. Later, our analysis reveals that when a manufacturer’s in-house quality cost is very low, or the degree of product differentiation is in the moderate range, the supplier encroachment could lead to a “win-win” outcome for both players

Pengaruh Harga, Diferensiasi Produk, dan Lokasi terhadap Keputusan Pembelian di Giant Ekstra Ujung Menteng Bekasi

The purpose of this study was to determine the effect of price, product differentiation and location on purchasing decisions at Giant Ekstra Ujung Menteng Bekasi, partially and simultaneously. The sample in this study were 100 respondents. Data analysis used validity and reliability tests, partial and simultaneous correlation coefficient tests, multiple linear regression analysis, determination coefficients and hypothesis testing. The results of the multiple regression equation = 2.325 + 1.139 X1 + 0.036 X2 + 0.098 X3. In the multiple regression analysis, the constant a is 2.325 which states that if the variables X1, X2, and X3 are constant, then the Y variable is 2.325. The X1 regression coefficient of 1.139 states that every increase in price will increase the scale of purchasing decisions by 1.139 with the assumption that the other variables are constant. . The X2 regression coefficient of 0.036 states that each increase in product differentiation will increase the scale of purchasing decisions by 0.036 with the assumption that other variables are constant. The X3 regression coefficient of 0.098 states that each increase in location will increase the scale of purchasing decisions by 0.098 with the assumption that other variables are constant. The results of the partial determination coefficient show that the effect of price on purchasing decisions is 87.60%. This shows that the price has an influence in increasing purchasing decisions. The effect of product differentiation on purchasing decisions is 3.96%. This shows that product differentiation has an influence in increasing purchasing decisions. The influence of location on purchasing decisions is 15.84%. This shows that location has an influence in increasing purchasing decisions. The results of the multiple determination coefficients show that the effect of price, product differentiation, and location on purchasing decisions is 85.19%. This shows that price, product differentiation, and location have an influence in increasing purchasing decisions. Based on the results of partial and simultaneous hypothesis testing, it shows that price, product differentiation and location have a significant effect on purchasing decisions at Giant Ekstra Ujung Menteng Bekasi.

The Pricing Strategy of Oligopolistic Competition Food Firms with the Asymmetric Information and Scientific Uncertainty

The arguments for and against genetically modified (GM) food focus on the characteristics of the scientific uncertainty and asymmetric information for the GM food. How do these two factors affect the competition and pricing strategy of food firms that separate GM food and conventional food conforming to consumer’s right to know? We explore the issue of pricing strategies between two firms producing horizontally and vertically differentiated foods in the context of asymmetric information and scientific uncertainty. The theoretical results show that there are two separating perfect Bayesian equilibria in which the prices of the conventional food and GM food are strategic complements and the profits of two types of firms are both increasing in the price of GM food. The numerical example shows that a decrease of the expected potential net damage as the most sensitive parameter leads to an increase of the profits of the two firms. Additionally, an increase in product differentiation helps to increase the two firms’ profits. Finally, the decrease in risk aversion as the second sensitive parameter helps to increase both products’ prices and quantities and both firms’ profits. This paper contributes by combining food safety regulation with market mechanisms and competition.

Demand Uncertainty, Returns Policies and Upstream R&D

Returns policy has been an essential part of contractual obligations between the upstream and downstream firms in the supply chain. However, as the increase in demand uncertainty recently, the costs of returns policy have become more and more expensive for upstream firms. To investigate whether the upstream suppliers can adopt some active actions to cope with the uncertain market demand, we establish a dynamic model with a two-tier market structure under demand uncertainty. Specifically, we study the upstream suppliers’ cost-reducing R&D activities under both full returns policy and no returns policy. Compared to no returns policy, full returns policy motivates the downstream retailer to order more stocks, but it requires the upstream suppliers to undertake all the potential returns risk caused by demand fluctuation. To avoid the potential returns loss under full returns policy, the upstream supplier has a stronger incentive to undertake R&D activities to reduce costs, especially when the demand fluctuation is higher. Furthermore, the upstream suppliers will invest more R&D as the increase in product differentiation under both full returns policy and no returns policy, since the impact of upstream supplier’s R&D on its own wholesale price become weaker as the increase in the product differentiation, but the impact on its rival’s wholesale price become stronger. We also analyze the equilibrium results in the numerical simulation method. All of the results show that, under some conditions, the combination of full returns policy and upstream suppliers’ R&D enable them to earn more money.

First Product Success: A Mediated Moderating Model of Resources, Founding Team Startup Experience, and Product‐Positioning Strategy

The success of the first product is of paramount importance for the future development of the new venture. Developing and launching a first product in the Chinese market is even more challenging than in a well‐developed market economy because of weak enforcement of intellectual property laws, a general consumer distrust of new products developed by Chinese firms, and the immediate threat of copycat.This article develops a mediated moderating model to examine first product success in Chinese new ventures, in which product‐positioning strategy (conceptualized as the degree of product differentiation) mediates the impacts of marketing resources, technical resources, and founding team startup experience on product success (conceptualized as timing of product launch and product market and financial performance). Furthermore, we argue that founding team startup experience moderates the impact of marketing and technical resources on building strong product‐positioning strategy.We test our conceptual model using a sample of 909 new products developed by 909 Chinese new ventures in a two‐step selection model. The empirical results provide important insight for new ventures' first product development. Product differentiation does not mediate the impact of marketing resource on product success; but it fully mediates the impact of technical resources on timing of product launch and partially mediates the impact of technical resources on product performance. Marketing resources have significant direct positive effects on both product performance and timing of product launch. Surprisingly, the impacts of marketing resources on product differentiation and product performance are negatively, not positively, moderated by founding team experience. When the founding team has nine years or less startup experience, an increase in marketing resources leads to a significant increase in product differentiation; and when the founding team has more than nine years of startup experience, an increase in marketing resources will not lead to an increase in product differentiation. The impact of marketing resources on product performance is smaller for founding teams with more prior startup experience than those with less prior startup experience. The impacts of technical resources are not moderated by founding team startup experience. Technical resources positively affect product market and financial performance directly as well as through its positive impacts on product differentiation. However, technical resources can negatively affect timing of the product launch because developing a highly differentiated produce can potentially delay the launch of the product. Therefore, new ventures have to be mindful in managing the available resources to succeed in the first product development.

Product Differentiation, the Volume of Trade and Profits under Cournot and Bertrand Duopoly

This article analyses how product differentiation affects the volume of trade under duopoly using Shubik-Levitan demand functions rather than the Bowley demand functions used by Bernhofen (2001). The drawback of Bowley demand functions is that an increase in product differentiation increases the size of the market so the increase in the volume of trade may be the result of the increase in the size of the market rather than the increase in product differentiation per se. The Shubik-Levitan demand functions have the advantage that an increase in product differentiation does not increase the size of the market, but consumers still have a ‘love of variety’. It is shown that the volume of trade in terms of quantities falls with increasing product differentiation when the trade cost is relatively low, but rises with increasing product differentiation when the trade cost is relatively high. Among the results, it is shown that the trade liberalisation is more likely to be profitable under Cournot duopoly than under Bertrand duopoly for differentiated products with a positive trade cost.

Market Reforms in India and the Quality of Economic Growth

This paper studies the quality of growth in three consumer goods industries in India during the period between 1980 and 2010. This period witnessed a radical change in policy from the “license raj” to the liberalization era. While recorded GDP growth was high throughout this period, this paper finds significant improvements in the quality of goods produced after the structural break in policy. Specifically, it finds a reduction in the technology gap between Indian and world production, an increase in product differentiation, and a reduction in the prevalence of defects in production in the case of all three goods. It then draws the implications of this finding for the “great Indian growth debate.”

Production in advance versus production to order: The role of downstream spatial clustering and product differentiation

In every production process, suppliers have to decide whether an item should be produced and stored as inventory before an explicit purchase order is received (production in advance), or whether it should be produced only after such an order is received (production to order). We study the determinants of this firm-level choice. We present a simple conceptual framework to derive predictions that we subsequently test in the empirical analysis. We argue that an increment in buyers’ spatial concentration benefits production in advance more in homogenous industries than in differentiated ones, while the benefits for production to order are larger as product differentiation increases. Consequently, the propensity to adopt one of the two production modes, following an increase in the number of local downstream buyers, changes according to the degree of product differentiation of the goods. Relying on a large data set of Italian manufacturing firms, we find empirical support to our ideas.

The number of firms, international product differentiation and an import tariff

By using an n-firm Cournot model, this article examines the relationships among the number of domestic and foreign firms, the product differentiation between the domestic and foreign firms and an import tariff. It is shown that the relative number of domestic and foreign firms as well as the degree of product differentiation between the domestic and foreign firms indeed affects the level of the tariff on imports. Furthermore, whether or not an increase in product differentiation between the domestic and foreign firms reduces the level of the import tariff is dependent on the relative number of domestic and foreign firms.

FIRM OWNERSHIP, PRODUCT DIFFERENTIATION AND WELFARE*

The purpose of this paper is to study the impact of firm ownership in a differentiated industry. We find there is no effect on product differentiation and welfare due to ownership ratio change between private and state so long as the private (state) ownership in a partially state‐owned firm remains at least half (less than half). However, when the private (state) ownership in the partially state‐owned firm falls below half (rises more than half), the degree of product differentiation increases (decreases) whereas welfare decreases (increases) in the share of private (state) ownership; and thus the extent of private or state ownership matters.

Optimal Licensing Policy in Differentiated Industries*

This paper analyses the policy implications of licensing between producers of differentiated goods. We consider and compare two-part tariff, fixed fee royalty and collusive licensing contracts. Under the optimal licensing policy, there will be no technology transfers if the innovation size is sufficiently small and degree of product differentiation is sufficiently low. Licensing deals that involve drastic innovations are always socially desirable. In the limit, as product differentiation converges to zero, it becomes socially desirable to transfer drastic innovations only. The range of innovation sizes that is socially optimal to transfer increases as product differentiation increases.

Intertemporal Price Competition

Alternating price competition between firms selling differentiated products to nonhomogeneous consumers can yield two different types of equilibria. One, which we call disciplined, arises when products are close substitutes. Another, which we call spontaneous, emerges when products are more differentiated. In disciplined equilibria, an implicit threat to cut price further, in response to an initial price cut, supports quite collusive outcomes, which become less collusive as product differentiation increases. In spontaneous equilibria, no such threat is needed. Consumers in the smaller market tend to pay a higher price, as do consumers served by the more efficient firm. Copyright 1990 by The Econometric Society.

Changing industrial buyer-seller pricing concerns

Many industrial marketers feel that price is becoming deemphasized to the extent that quality is being stressed, dollar devaluation experienced, and the shift from cost reduction to service development realized. Others believe that a reemphasis on price is coming about due to current instability with certain imperfectly competitive markets, the increase in product differentiation, and greater (and sometimes new) pressures from outside forces. Regardless of one's position, traditional views concerning price and conventional ways of dealing with it must be reevaluated more thoroughly and often on a more frequent basis.

Differential Changes in Conditions of Entry Produced by Four Forms of Taxation

The possible effects of taxation on industry structure have been largely ignored in the economic literature. Writers in public finance have considered industry structure in analyzing the effects of taxes, but mention of changes in industry structure caused by taxation has been meager.' In industrial organization literature, the identified effects of taxation are limited to special cases. Examples of such analysis include the structural effect of turnover taxes on intermediate products [10, 125], the discriminatory effects of progressive taxes on small firms [6, 250], and the impact of special tax treatment of losses and interest payments on the growth of conglomerates [14, 142-59]. Closer to the topic of this paper, but still remote, are the observations that high per unit excise taxes on cigarettes and gasoline limit the effectiveness of price as a competitive weapon. This paper explores the theoretical relation between four forms of taxation, product differentiation, and the conditions of entry. Per unit and ad valorem sales taxes, value added taxes, and profits taxes are considered. The analysis indicates that all taxes decrease the barrier to entry when products are homogeneous, but that the decrease will be less and may become an increase as the degree of product differentiation increases. When changes in the tax rates are designed to yield the same change in tax revenue, the profits