Should competing firms reveal their capacity?

In this article, we explore when firms have an incentive to hide (or reveal) their capacity information. We consider two firms that aim to maximize profits over time and face limited capacity. One or both of the firms have private information on their own capacity levels, and they update their beliefs about their rival's capacity based on their observation of the other firm's output. We focus on credible revelation mechanisms—a firm may signal its capacity through overproduction, compared to its myopic production levels. We characterize conditions when high‐capacity firms may have the incentive and capability to signal their capacity levels by overproduction. We show that prior beliefs about capacity play a crucial, and surprisingly complex, role on whether the firm would prefer to reveal its capacity or not. A surprising result is that, despite the fact that it may be best for the high‐capacity firm to overproduce to reveal its capacity when capacity information is private, it may end up with more profits than if all capacity information were public knowledge in the first place. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013     

A rent‐seeking model of international competition and alliances∗

This paper presents an alternative approach for analyzing international competition and alliances as rent‐seeking contests that are able to capture the impure public good nature of defense spending. Two‐country Cournot and Stackelberg games are considered and comparative static results derived. A three‐country model is investigated, and alliance behavior is explored in the context of this rent‐seeking model. The conjecture that an alliance may become less effective if the allies’ interests become more closely aligned is verified. Finally, the model is generalized, and a Nash‐Cournot equilibrium is computed.     

“法条竞合”若干问题研究

"法条竞合"在我国刑事立法中普遍存在,其理论比较复杂.法条竞合的概念与种类、法律性质以及法条竞合的适用原则等问题,目前在我国刑法理论界尚无统一定论.理论上对这些问题进行深入研究、探讨,有助于在司法实践中准确选择适用法条.     

Social benefits of government investment in enterprises

A critical issue for many governments is boosting the adoption rates of products or technologies that enhance consumer surplus or total social welfare. Governments may, for example, pay subsidies to producers or to consumers to stimulate the manufacture or consumption of specific products, for example, energy-efficient appliances or more effective drugs. This research proposes a strategic government investment policy, namely, share acquisition, and demonstrates its effectiveness in reaching societal objectives. We consider a Cournot quantities-choice market comprised of homogeneous firms where the government intervenes to buy shares, and turning private firms into state-owned enterprises. We recognize that purchasing a single private firm is the optimal policy for the government to reach its societal objectives. Additionally, taking into consideration financial constraints, we find that the optimal stake increases with the budget. Compared with the optimal output-based subsidy policy, when the budget is low, the optimal government investment policy induces a higher consumer surplus. In addition, in differentiated Cournot competition, under which firms compete in selling substitutable products, we find that when the budget is sufficient, the optimal stake purchased first decreases and then increases according to the substitutability level among products.     

Timing of information acquisition in a competitive environment

This article investigates the impact of timing on sellers' information acquisition strategies in a duopoly setting. Market uncertainty is captured by a representative consumer who has a private taste for the product's horizontal attribute, and both sellers can acquire this information either before (ex‐ante acquisition) or after (ex‐post acquisition) observing their own product qualities. We identify several conflicting effects of information acquisition that vary significantly in its timing and market characteristics. In the monopoly scenario, information acquisition is unambiguously beneficial and ex‐ante acquisition is the dominant option, because it helps a seller not only design the proper product but also craft better pricing strategy. By contrast, when there is competition, information acquisition eliminates the buffer role of market uncertainty and leads to the fiercest production or pricing competition, which makes the subsequent effects of acquisition detrimental, and a seller's payoff is nonmonotonic in terms of its acquisition cost. Moreover, compared with the ex‐ante information acquisition, ex‐post information acquisition normally generates higher sellers' equilibrium payoffs by postponing the timing of acquisition and maintaining product differentiation. Nonetheless, ex‐post information acquisition also provides the seller with greater acquisition incentive and occasionally makes him worse off than that in the ex‐ante scenario. Thus, in a competitive environment, having the option of information acquisition and flexibility in its timing can be both detrimental and irresistible. © 2016 Wiley Periodicals, Inc. Naval Research Logistics 63: 3–22, 2016     

Impacts of sequential acquisition,market competition mode,and confidentiality on information flow

We investigate information flow in a setting in which 2 retailers order from a supplier and sell to a market with uncertain demand. Each retailer has access to a signal. The retailers can disclose signals to each other (horizontal information sharing), while the supplier can solicit signals by offering retailers differential payments as incentives for signal disclosure (vertical information acquisition). In the base setting, market competition is in quantity, and a retailer can fully infer the signal that the other retailer discloses to the supplier. We show that the supplier prefers to sequentialize the procedure for information acquisition. Moreover, vertical information acquisition by the supplier is a strategic complement to horizontal information sharing between the retailers to establish information flow. In the equilibrium, the retailers have no incentive to exchange signals, but system wide information transparency can be realized through a combination of information acquisition and inference. We further study the signaling effect, whereby the supplier utilizes wholesale pricing as an instrument to affect the retailers' inference of the shared signals, and price competition to explore their impacts on the supplier's preference for sequential acquisition and the sustainability of information flow.     

The value of losing control: Competition in markets for complements

When selling complementary products, manufacturers can often benefit from considering the resulting cross‐market interdependencies. Although using independent retailers makes it difficult to internalize these positive externalities, the ensuing double marginalization can mitigate within‐market competition. We use standard game theoretic analysis to determine optimal distribution channel strategies (through independent retailers or integrated) for competing manufacturers who participate in markets for complements. Our results suggest that a firm's optimal channel choice is highly dependent on its competitive positioning. A firm with a competitive advantage in terms of product characteristics (customer preferences) or production capabilities (cost) might benefit from selling through company‐controlled stores, allowing coordinated pricing across the two markets, whereas a less competitive firm might be better off using independent channel intermediaries to mitigate price competition. We consider two scenarios depending on whether the two firms make their distribution channel decisions sequentially or simultaneously. Although firms are unlikely to make such decisions at exactly the same instant, the simultaneous model also serves as a proxy for the scenario where firms decide sequentially, but where they cannot observe each other's strategic channel choices. For the sequential case, we find that the sequence of entry can have tremendous impact on the two firms'profits; whereas in some cases, the first mover can achieve substantially higher profits, we find that when the two markets are of sufficiently different size and only loosely related, a firm with a competitive advantage might be better off as a follower. Interestingly, our results suggest that, when the markets are of rather similar size, both firms are better off if they enter the industry sequentially. In those cases, the first entrant has incentive to reveal its planned channel strategies, and the follower has incentive to seek out and consider this information. © 2010 Wiley Periodicals, Inc. Naval Research Logistics, 2010     

Should firms conceal information when dealing with common suppliers?

A firm making quantity decision under uncertainty loses profit if its private information is leaked to competitors. Outsourcing increases this risk as a third party supplier may leak information for its own benefit. The firm may choose to conceal information from the competitors by entering in a confidentiality agreement with the supplier. This, however, diminishes the firm's ability to dampen competition by signaling a higher quantity commitment. We examine this trade‐off in a stylized supply chain in which two firms, endowed with private demand information, order sequentially from a common supplier, and engage in differentiated quantity competition. In our model, the supplier can set different wholesale prices for firms, and the second‐mover firm could be better informed. Contrary to what is expected, information concealment is not always beneficial to the first mover. We characterize conditions under which the first mover firm will not prefer concealing information. We show that this depends on the relative informativeness of the second mover and is moderated by competition intensity. We examine the supplier's incentive in participating in information concealment, and develop a contract that enables it for wider set of parameter values. We extend our analysis to examine firms' incentive to improve information. © 2014 Wiley Periodicals, Inc. 62:1–15, 2015     

Inventory competition with yield reliability improvement

This article studies the inventory competition under yield uncertainty. Two firms with random yield compete for substitutable demand: If one firm suffers a stockout, which can be caused by yield failure, its unsatisfied customers may switch to its competitor. We first study the case in which two competing firms decide order quantities based on the exogenous reliability levels. The results from the traditional inventory competition are generalized to the case with yield uncertainty and we find that quantity and reliability can be complementary instruments in the competition. Furthermore, we allow the firms to endogenously improve their yield reliability before competing in quantity. We show that the reliability game is submodular under some assumptions. The results indicate that the competition in quantity can discourage the reliability improvement. With an extensive numerical study, we also demonstrate the robustness of our analytical results in more general settings. © 2015 Wiley Periodicals, Inc. Naval Research Logistics 62: 107–126, 2015     

Why provoke? the Sino-US competition in East Asia and North Korea’s strategic choice

This article seeks to make sense of North Korean provocations in light of the Sino-US strategic competition in post-Cold War East Asia, where such variables as China’s rise, US’s pivot to Asia, and growing Sino-ROK economic ties are driving the strategic choices of major states in the region. The article examines the main motivations behind Pyongyang’s provocations since the end of the Cold War, discusses their implications for the Sino-US strategic competition in East Asia, and offers predictions about the future of North Korean provocations. The central thesis of the article is that Pyongyang has exploited the Sino-US strategic competition in East Asia for its regime survival. By raising North Korea’s strategic value to China, the intensifying Sino-US competition allows Pyongyang to continue provocations, regardless of Beijing’s explicit opposition.