Luận Văn Essays in industrial organization by Wen, Wei-jen (2000)

Essays in industrial organization

The first two chapters of my dissertation study how the existence of a resale market affects the profitability and welfare of a durable goods monopoly. Chapter one considers a model where the good in question depreciates after being used and the monopolist can commit to the production plan. With heterogeneous consumers, I find that the monopolist earns more when a resale market is present if the depreciation is small. However, opposite result holds if the depreciation is large. While different distributions of consumer's valuation lead to the same profitability result, they determine whether the existence of a resale market is welfare enhancing. Chapter two consists of two extensions of Chapter one. First, I relax the commitment assumption. While, in general, commitment power tends to increase the monopolist's profit and reduces social welfare, I provide an example in which commitment power could be welfare enhancing. Second, I consider a model with quality improvement. I find that there is a parallel between quality improvement and physical depreciation models: A resale market increases/decreases the monopoly's profitability if the goods on the market are less/more differentiated. However, this model has different implication on welfare. Whether the existence of a resale market increases welfare does not depend on the distributions of the consumer's valuation. Chapter three studies a different issue. One of the commonly used strategies by the premium quality firms to protect their profit from low-price-low-quality competitors is to introduce a fighter brand. For example, in the laundry detergent market, Procter & Gamble uses Gain to fight the private labels. In this chapter, I study the tradeoffs faced by a multi-product firm when it adopts such a strategy. I analyze a situation where a multi-product firm competes with a single-product firm in a world of vertical product differentiation. I find that when the product quality can vary a great deal, the multi-product firm tends to launch multiple products because it gains more from price discrimination and loses less from cannibalization. On the other hand, the firm launches only one product if the quality differences are small.
[TABLE="class: citation"]
[TR]
[TH]Format:[/TH]
[TD]Dissertation[/TD]
[/TR]
[TR]
[TH]Author(s):[/TH]
[TD]Wen, Wei-jen[/TD]
[/TR]
[TR]
[TH]Published:[/TH]
[TD]2000[/TD]
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[TR]
[TH]Language:[/TH]
[TD]English[/TD]
[/TR]
[/TABLE]