Product Market Structure Research Articles

Extended service strategy choice for competing manufacturers in agency retail platform considering consumer preferences

PurposeWe investigate the extended service strategy choices of competing manufacturers and examine their impact on the retail platform.Design/methodology/approachWe construct a supply chain model with a retail platform as the leader and manufacturers as the followers. Manufacturers face differential consumer preferences on the same agency retail platform, and they can sell a bundled extended service product and sell a separate product without any extended service.FindingsThe sale of extended warranty services on the retail platform leads to lower pricing of the manufacturers' products and changes in the product market structure in response to differences in consumer preferences. The retailing platform tends to provide an extended warranty conditionally. The sale of extended warranty services on a retail platform would be detrimental to the interests of the manufacturer who sells products with extended warranty services and in favor of the manufacturer who sells products without them.Originality/valueThe equilibrium results of the retail platform’s non-sales and sales of extended warranty services for the no-extended warranty product under the same commission rate and differential commission rate models are discussed, and the product structure of the market is investigated, respectively.

Trade liberalisation and off-farm employment of the rural labour force: Evidence from China’s WTO accession

This paper investigates the impact of trade liberalisation on the rural labour force in China, with a particular focus on labour mobility and off-farm employment. The analysis utilises micro data from the National Fixed Point Survey and Chinese manufacturing firms. The identification strategy relies on combining information on the initial province labour and product market structure with the exogenous tariff reduction schedule over WTO accession and distinguishes between output markets and intermediate input tariffs. The results are as follows: First, the reduction of output tariffs does not promote rural labour mobility, whereas the reduction of input tariffs has a positive impact on mobility. Additionally, output tariffs reduce off-farm employment income and time, while input tariffs increase them. This conclusion is applicable only to low-skilled labour. Second, the tariff reduction significantly affects total wages and the number of employees in firms, as supported by macro data. This suggests that tariff cuts have implications for firm employment and, consequently, rural employment. Third, tariff cuts have a more pronounced effect on young individuals, those with lower levels of education, and the female workforce. Therefore, the interests of these groups should be fully considered in the process of further import liberalisation and tariff reduction.

Acquisitions and Technology Value Revision

Acquisition announcements coincide with upward value revisions for the target firms’ technology peers, which are not due to economic relations based on product market, supply chain, or geographical location. Such a phenomenon is robust across subsample periods, not specific to merger or technology waves, and not related to product-market structure and the unique innovation features of certain technology-intensive industries. Firms experience more dramatic value revisions when they have deeper technology overlaps with their targets, are more dependent on technology, or when a transaction features higher premium or greater technology overlap between the acquirer and target. Our mechanism analysis provides evidence that is primarily consistent with the acquisition-probability hypothesis whereby acquisition announcements elevate expected technology synergies and merger prospects for peers and partially in line with the enhanced-investment hypothesis that peers’ revaluations correlate with increased technology investments. We do not find any evidence in line with the competition-balance hypothesis that attributes peers’ value revisions to the change in industrial competition intensity. Overall, our results demonstrate that acquisition announcements disseminate novel information about the value of technology that is of common interest among firms with close technologies. This paper was accepted by Gustavo Manso, finance. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4890 .

DESIGN IN THE CONTEXT OF THE CONTEMPORARY CULTURAL SITUATION: STATUS TRANSFORMATION

This study examines the changing status of design in the context of its relation with art. Currently, design has overcome its peripheral position and transformed into a special creative project activity aimed at harmonization of modern human life, solving the problems of artistic and imaginative structuring, transformation and communication of objective-spatial, procedural and sign-informative human environment. The factors determining the actual position of design in culture are the totality and globalism of design, institutionalization of collective design, collecting and market structure of design products, high cost of collective design objects, growth and consolidation of the influence of museums of design in the world. The paper is concluded that at the present stage there has been a transformation in the status of design and it is trying to reclaim more space in the culture. Design aims to give the consumer new impressions and emotions and this proves that it is not only an activity to transform the object-spatial world of man, but also a new form of human interaction with the design product.

Evaluating the International Competitiveness of RCEP Countries’ Biomass Products in the Context of the New Development Paradigm

As research related to the clean use of primary energy and new energy technologies continues to intensify in countries around the world, biomass energy has been incorporated into the long-term development plans of many countries for energy use due to its unique zero-carbon emission advantages. However, there are fewer studies on the competitiveness of biomass products in the literature. In this study, we adopted the constant market share (CMS) model and IRCA index method to measure the long-term trend of international competitiveness of biomass energy products in Regional Comprehensive Economic Partnership (RCEP) countries, which enriches the research on the competitiveness of biomass energy products. The two methods integrate multiple indicators to analyze the competitiveness of biomass energy in each country, making up for the deficiency that the RCA index can only be analyzed from trade volume. The results show that (1) the international competitiveness of biomass energy products in RCEP countries is on an upward trend; (2) the main biomass energy products of RCEP countries lack comparative advantages in the world market; and (3) the export market structure of biomass energy products in RCEP countries is not adapted to the world market demand. Finally, based on the above research findings, this paper puts forward some policy suggestions for exporting biomass energy products.

Research on the Problems and Countermeasures of China's Wooden Furniture Product Exports

After the reform and opening up, China's wooden furniture industry has made great progress. The production of wooden furniture has continued to grow, and the total amount of exports is also steadily increasing. Wooden furniture is also an integral part of our daily life. As China's economy continues to develop, the demand for wooden furniture is increasing and the proportion of its exports is rising year on year. Since China's accession to the WTO, China's exports of wooden furniture have gradually expanded and China's influence and competitiveness in the international market has increased. However, there are still many problems in China's wooden furniture export trade, including the export market being too congregated and facing trade barriers; facing competitive pressure from the markets of emerging countries, led by Vietnam; increasing export costs and low added value of products; and a single product structure and weak brand awareness. The main reason for these problems is that the export value of Chinese wooden furniture products is small, the export scale is not large, and the export scale fluctuates; the export product structure is simple, of which bedroom wooden furniture occupies a large proportion; the export market structure is too aggregated, mainly in the United States. Therefore, China's wooden furniture industry should continue to optimize the market structure of products, and actively respond to trade barriers; actively respond to the challenges from the international market, to strengthen international competitiveness; constantly adjust the product structure, establish and strengthen brand awareness, to create high-quality, high value-added wooden furniture products, in order to promote the development of wooden furniture export trade.

TECHNOLOGY INNOVATION, SUPPLY CHAIN RISK AND DIGITAL MARKETING TOWARDS BUSINESS PERFORMANCE. A CONCEPTUAL STUDY IN LIVESTOCK INDUSTRY IN MALAYSIA

The livestock industry has become the most dynamic market globally. This is being driven largely by demand due to growth in purchasing power and modern technology. With the constant improvement of the degree of livestock products trade, the market operation and structure of livestock products are also transformed. The survival and development of the livestock industry are dependent on the comprehensive strength of the whole industry chain, therefore, the study of the technology innovation, supply chain risk, and digital marketing towards the business performance of the livestock industry in Malaysia is required. Hence, the ability to conceptualize, observe and give due recognition to the possible relation amongst these variables in question by the livestock industry, perhaps could bring about an insightful engagement for the betterment of the livestock business performance. This paper does not attempt to provide a comprehensive overview of livestock markets and trends in Malaysia or elsewhere in developing countries. On the basis of this, the relationship between technology innovation, supply chain risk, digital marketing, and livestock industry performance is used in this paper, which improves the whole performance of the livestock industry and enhances international competitiveness.

Numbers of bricks and clicks: Price competition between online and offline stores

The development of internet technology has reshaped the market structure for many products. We study the price competition problem between online stores and offline stores, by allowing consumers’ preferences to be more favorable towards online shopping. We consider 3 scenarios: (1) market with one online store; (2) market with multiple online stores; (3) market with no online store. For each scenario, we characterize equilibrium and conduct comparative statics analysis. Our results show that the market environment parameters may have different effect on important equilibrium variables, and the direction of such effect depends on consumers’ relative preference between online shopping and offline shopping. Furthermore, we provide a complete characterization regarding the welfare comparisons among all possible market structures, showing that the optimal structure from the perspective of consumers or the social planner depends on consumers’ relative preferences between the two channels, while the optimal structure in terms of producers’ surplus maximization is the one with no online store. By revisiting the competition between “Bricks” and “Clicks”, we contribute to the literature with new insights on both the comparative statics of equilibrium variables with respect to market environment parameters and the welfare consequences of market competition under different structures.

Duopoly Competition with Network Effects in Discrete Choice Models

It has been realized for a long time that network effects play an important role in how market participants compete with each other. Arguably, companies like Facebook and Google are able to gain immense market power by leveraging the network effects of their consumers, despite potential competitors. This paper investigates how the dynamics play out in duopoly competition. We find that when the network effects per unit of consumption are weak, the competitors can co-exist and gain even market shares. As network effects become stronger, it is unstable, and even impossible, for the firms to coexist, and one firm emerges victorious, taking the majority of the market. The study provides a theoretical analysis for commonly observed market phenomena. It may also have implications for antitrust legislation: Special policies need to be created to maintain a competitive market structure for products and services with strong network effects.

Identifying market structure to monitor product competition using a consumer-behavior-based intelligence model

PurposeThe objective of this paper is to propose a consumer-behavior-based intelligence (CBBI) model to identify market structure so as to monitor product competition. Competitive intelligence extracted from Chinese e-business clickstream data is exploited to examine the relevance of consumers' heterogeneous behavioral feedback, namely, click, tag-into-favorite, time-of-browsing, add-into-cart, and remove-from-cart, to visualize the competitive product market structure and to predict product-level sales.Design/methodology/approachOur proposed CBBI model consists of visualization and prediction, which explore e-business clickstream data. We conduct the visualization and segmentation of market structure in the form of a perceptual map by employing K-means clustering algorithm and multidimensional scaling technique. Concurrently, we developed an updated Bayesian linear regression (BLR) to predict product-level sales by considering consumers' heterogeneous feedback. Our updated BLR specifically integrated the estimated knowledge of the previous periods to verify whether product sales are period-dependent due to the consumer memory effect in e-commerce, improving the conventional BLR of diffuse prior distribution setup in terms of mean absolute error (MAE) and root mean squared error (RMSE).FindingsConsidering the performance of consumers' heterogeneous actions, the present research visualized three different segments of the competitive market structure in a perceptual map, and its horizontal axis is shown as a signal of the ascending trend of product sales. The previous five-day period was ascertained to be the best size of a time window for the consumer memory effect on product sales prediction. This hypothesis is supported by the concept that product sales are period-dependent. The results of the proposed updated BLR indicate that consumer tag-into-favorite, add-into-cart, and remove-from-cart feedback have positive impacts on product-level sales while click and time-of-browsing have the opposite effect.Originality/valueWhile the identified competitive product market structure elaborates consumer heterogeneous feedback toward alternative product choices, this paper contributes by extending those homogeneous consumer preferences-related marketing studies. The perceptual map's configuration in respect to period-dependent product sales facilitates the effective inclusion of consumer behavior application in product sales prediction research in e-commerce. This paper helps sellers and retailers better comprehend the impacts of heterogeneous feedback and the consumer memory effect on the degree of competition in the form of product sales. The research results also offer a managerial implication about shaping the competitive edge by conducting different product management strategies in e-commerce platforms.

Product Market Structure and Monetary Policy: Evidence from the Euro Area

Product Market Structure and Monetary Policy: Evidence from the Euro Area

Globalization and Workforce Composition in Indian Formal Manufacturing: New Evidence on Product Market Competition Channel

A variety of mechanisms linking globalization and margins of adjustments in the labor markets have been empirically tested in recent years. How globalization could affect the workforce composition of industries and thereby the quality of jobs, a key labor market indicator is much less studied and the econometric evidence is sparse. This study contributes to filling the gap by studying India’s formal manufacturing sector that experienced deep trade and industrial reforms since the 1990s. Industry-level panel data are analyzed to establish the indirect link between product market structure (concentration) and workforce composition of firms (usage of contract workers). We explicitly measure changes in market concentration using a newly constructed trade-adjusted concentration ratio, profitability (price-cost mark-up), and workforce composition (usage of contract workers) to show how the effect of globalization is mediated indirectly through the product market structure. Our sample includes 46 three-digit formal manufacturing industries spanning from 1998 to 2014. The findings provide significant evidence that Indian manufacturing firms responded to globalization by hiring relatively more contract workers a key margin of labor market flexibility. This finding underlines the importance of understanding the indirect ways in which globalization could affect labor market conditions and workers' welfare in developing countries.

Wage-setting practices in the metalworking sector in Greece

PurposeThe paper aims to link product market features in the Greek metal processing sector to the wage-setting practices followed therein.Design/methodology/approachAggregate business structural statistics are used to document the product market structure features while information from a rich sectoral collective agreement database, covering a number of sectors of the Greek economy, is used for the wage-setting practices. The approach is, in general, descriptive and discursive with the use of some regression analysis.FindingsThe main findings of the paper include: first, the metal sector as a whole is heterogeneous in terms of its structural/productive features; second, the type of collective agreements followed in the subsectors of the metal sector appear related to the structural features of the subsectors; third, negotiated wages appear binding for subsectors facing less product market competition; and finally, the ability to opt out of the sectoral agreement and sign firm-level agreements during the recent crisis in Greece was used mainly by firms suffering accounting losses.Research limitations/implicationsThe research results are limited by the absence of detailed firm-level information both on the actual wages paid and on the exact industrial relations practices in the workplace.Originality/valueIn view of the changes taking place in industrial relations in general and collective bargaining in particular, the issue of the homogeneity – in terms of structure and performance – of individual sectors, sets the question of whether one size (agreement) fits all and consequently whether extensions of agreements to whole sectors are advisable. This is the spirit in which the paper is written. The originality is linked both to the issue addressed but also to the use of the detailed collective labour agreements information and its association with product market features.

Market structure and quality determination for complementary products: Alliances and service quality in the airline industry

This paper explores the effect of market structure on quality determination for complementary products. The focus is on the airline industry and the effect of airline alliances on flight frequency, an important element of service quality. With zero layover cost, the choice of flight frequencies has the same double-marginalization structure as in the usual alliance model, leading to a higher frequency in the alliance case as double marginalization is eliminated, along with a lower full trip price and higher traffic. The surprising result of the paper emerges with high-cost layover time, where double marginalization in frequencies is absent and where an alliance reduces service quality via a lower frequency, with the full price potentially rising (in which case traffic falls).

The Only-Child’s Portfolio Allocation in China: Expectations and an Empirical Investigation Based on Trust and Risk Attitudes

Over the past 30 years, China has implemented a radical one-child policy for a couple to control overpopulation growth. Although China abolished the one-child policy in 2015 and replaced it with a comprehensive two-child policy, the massive one-child generation, which born during the one-child policy, has grown into adulthood and become a pillar of society in all spheres. So how will the only-child in adulthood allocate portfolio, and whether there is a difference between the portfolio of the only child and the non-only-child? These problems have become an important part of clarifying the assets of Chinese householders’ portfolio allocation. Based on the CFPS2010 and CHFS2011 data, this paper investigates the only-child’s portfolio allocation and finds that: householders headed by the only-child are significantly less likely to invest in stocks and hold a market value than householders headed by the non-only-child, and it is still valid after the instrumental variable method is used to overcome the endogenous bias. This means that the only-child is more risk-averse than the non-only-child in portfolio allocation. The main causes may be that, because of lacking social interaction and resource dilution from siblings, the only-child is more averse to risks and tends to trust others less than the non-only-child. Furthermore, the empirical test finds that householders’ trust and risk preference significantly improve risky asset market participation, and it is proved that the only-child trusts others significantly less than the non-only-child, but there is no significant difference between the only-child and the non-only-child in risk attitudes. This paper may be the first literature to investigate the only-child’s portfolio allocation, which not only enriches the research on Chinese householders’ portfolio allocation, moreover, but also greatly supplements the literature on the socioeconomic impact of China’s one-child policy. At the policy level, the only-child is more risk-averse, which means that micro-financial enterprises may need to pay attention to the portfolio allocation of the only-child, and target at innovative and marketing financial products to meet the needs of the only-child. At the same time, with the large-scale only-child growing up, their behavioral characteristics of more risk-averse may have a significant impact on the market structure of financial products. Therefore, policy authorities may also need to pay close attention to risks which are implied in the changes of the financial structure, as well as its impact on macroeconomic policies.

Industry concentration, stock returns and asset pricing: The UK evidence

How does competition in firms’ product markets influence stock returns? We examine this question using firms domiciled in the UK. We find that firms in less concentrated industries earn higher returns, even after controlling for the well-known determinants of the cross-section of UK stock returns. Furthermore, we suggest a novel asset pricing model that explicitly incorporates industry concentration as a distinguished risk factor capturing important features of product markets. Our results link the explanatory power of R&D activity of stock returns to product market structure. Also, we suggest an explanation for value premium on the basis of product market structure that favours barriers to entry interpretation for the higher returns obtained by less concentrated industries.

The Impact of Commodity Taxation on Firms' Product Portfolio and Market Structure

Excise taxes are one of the primary tools used to discourage consumption of socially undesirable or unhealthy products. When considering implementation of such taxes, the current policy and academic discussions have focused on potential outcomes due to price changes. In this paper, we document that price changes are only the immediate response to tax policy changes, and in the long run tax changes can impact product offerings. Using exogenous changes in tax rates from multiple empirical contexts; (1) the Korean soju market and (2) the U.S. cigarette market, we show that a tax increase is followed by a significant drop in number and variety of product offerings. In addition, the change in product assortments post-tax hinges critically on the nature of tax imposed. We find that specific taxes, as opposed to ad valorem taxes, lead to the exit of products with larger pack size. We conduct a simulation experiment and estimate that studies which do not consider assortment changes can result in a 9% upward bias in consumer welfare for large tax increases. Our findings have important policy implications for research examining the impact of taxes on market outcomes.

Complexity of Products: The Effect of Data Regularisation.

Among several developments, the field of Economic Complexity (EC) has notably seen the introduction of two new techniques. One is the Bootstrapped Selective Predictability Scheme (SPSb), which can provide quantitative forecasts of the Gross Domestic Product of countries. The other, Hidden Markov Model (HMM) regularisation, denoises the datasets typically employed in the literature. We contribute to EC along three different directions. First, we prove the convergence of the SPSb algorithm to a well-known statistical learning technique known as Nadaraya-Watson Kernel regression. The latter has significantly lower time complexity, produces deterministic results, and it is interchangeable with SPSb for the purpose of making predictions. Second, we study the effects of HMM regularization on the Product Complexity and logPRODY metrics, for which a model of time evolution has been recently proposed. We find confirmation for the original interpretation of the logPRODY model as describing the change in the global market structure of products with new insights allowing a new interpretation of the Complexity measure, for which we propose a modification. Third, we explore new effects of regularisation on the data. We find that it reduces noise, and observe for the first time that it increases nestedness in the export network adjacency matrix.

Optimal Executive Compensation Dispersion and Product Market Structure

Executive compensation is considered as one of the most crucial issues for the corporate governance. The proper executive compensation dispersion can be employed to motivate the top managers and then to boost the firm performance, but the definition of “proper” varies in the existing literature. The bigger dispersion is better for firm performance based on Tournament Theory but smaller one is better according to some other theories. In this paper, we try to theoretically study the optimal executive compensation by considering the internal and external situation of the firm at the same time, especially the influence of product market. We find the optimal compensation dispersion will increase (decrease) if more (less) firms enter the market when the cost of sabotage increases more rapidly than the cost of effort, vice versa. The findings imply the firm should increase (decrease) the compensation dispersion if the intensity of competition in product market decreases (increases) when sabotage is expensive and the firm should increase (decrease) the compensation dispersion if the intensity of competition in product market increases (decreases) when sabotage is cheap.

Technology and evolving supply chains in the beef and pork industries

The U.S. beef and pork industries have achieved dramatic productivity growth in recent decades; however, the supply chain and market structure of each industry has evolved in different ways. Technological advances have been a key reason for productivity growth, with pharmaceutical innovations playing a major role. This article canvasses the similarities and differences in how beef and pork flow through their respective supply chains and documents the changes, causes, and benefits of the increased efficiency in each industry. Past research is summarized in a broad view of the livestock industry and policy and trade issues are discussed. Such a perspective allows for the consideration of what the future might hold for each industry, and how technological innovation influences product quality, trade, and market structure.