On the effects of downstream entry

Article Abstract:

The impact of the entry of companies in a downstream market where they purchase some products from upstream suppliers and then sell their output to consumers was examined. The study focused specifically on the entry's impact on the downstream-market production and consumer price, the profitability of incumbent companies in the downstream market, the suppliers' input price and the suppliers' profitability. The findings do not provide unequivocal support for the popular belief that the arrival of a new company in a market increases the market's output, drives down consumer prices and weakens the profitability of incumbent firms. In fact, the results suggest that this conventional wisdom may not apply once a firm's input buying process in a market is explicitly modeled, and may have different consequences. Two effects of market entry, namely, competitive effect and input cost effect, are discussed.

Author: Tyagi, Rajeev K.
Business-to-business market, Business to business market, Industrial suppliers

User Contributions:

Comment about this article or add new information about this topic:

CAPTCHA


Meta-analysis of the impact of research methods on findings of first-mover advantage

Article Abstract:

A meta-analysis was performed to find out if research methods had an influence on the results of studies supporting the claim that firms making an early entry into markets have better performance than others that follow their lead. Based on the analysis of 90 statistical tests, it was revealed that tests employing market share as the performance measure had a higher probability of arriving at a first-mover advantage than tests that rely on other indicators, including profitability and survival. Tests that sample from individually chosen industries and those that did not measure the competitive position of the entrants were also found to have a greater likelihood of finding first-mover advantage. The meta-analysis suggests that the first-mover advantage will be less frequent if certain 'limiting' techniques were not applied.

Author: VanderWerf, Pieter A., Mahon, John F.
Analysis, Management research, Methodology, Research methods

User Contributions:

Comment about this article or add new information about this topic:

CAPTCHA


Signals and choices in a competitive interaction: the role of moves and messages

Article Abstract:

Signaling has long been recognized as a marketing strategy in which companies intentionally or unintentionally inform their competitors of their intentions, motives, goals or internal situation. Research was conducted to investigate how the decisions of managers operating in an interdependent market are influenced by signals coming from their competitors. Specifically, the influence of observable competitor actions and reports of verbal communications by the competitor on managerial decision-making was analyzed in the context of a multi-period pricing simulation. Findings showed that competitor signals significantly influenced the decisions of managers. Results also suggested that cooperative competitor signals encourage managers to cooperate as the interaction between the two parties progresses.

Author: Moore, Marian Chapman
Industrial cooperation

User Contributions:

Comment about this article or add new information about this topic:

CAPTCHA


Subjects list: Research, Competition (Economics)
This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.