Scale economies are commonplace in operations, yet, due to analytical challenges, relatively little is known about how ...rms should compete in their presence. This paper presents a model of competition between two ...rms that face scale economies; i.e., each ...rm's cost per unit of demand is decreasing in demand. A general framework is used, which incorporates competition between two service providers with price and time sensitive demand (a queuing game) and competition between two retailers with ...xed ordering costs and price sensitive consumers (an EOQ game). Reasonably general conditions are provided under which there exists at most one equilibrium with both ...rms participating in the market. We demonstrate, in the context of the queuing game, that the lower cost ...rm in equilibrium may have higher market share and a higher price, an enviable situation.

Abstract: I examine the release date scheduling of all motion pictures that went into wide release in the US in 1995 and 1996 to investigate the effects of vertical market structure on competition. The evidence suggests that complex vertical structures involving multiple upstream or downstream firms generally do not achieve efficient outcomes in movie scheduling. In addition, analysis of the data suggests that the production divisions of the major studios act as integrated parts of the studio, rather than as independent competing firms.

In this paper, we assume that firms can create independent divisions which compete in quantities in a homogeneous good market. Assuming identical firms and constant returns to scale, we prove that the strategic interaction of firms yields Perfect Competition if the number of firms is beyond some critical level. Assuming a fixed cost per firm and an upper bound on the maximum number of divisions, we show that when this upper bound tends to infinity and the fixed cost tends to zero, market equilibrium may yield either Perfect Competition or a Natural Oligopoly.

In this paper we closely examine the implications of comparative advantage for foreign direct investment (FDI) incentives. Particularly, we find that the host country’s comparative advantage sector is more attractive to inward FDI than its comparative disadvantage sector. This finding is supported by empirical evidence. However, such a cross-sector FDI comparison has not been studied, theoretically and explicitly, in the literature. This paper contributes to the literature by filling this gap. We have also obtained some other results such as how the degrees of comparative advantage and absolute advantage affect FDI incentives, and whether a multinational corporation (MNC) should allow its foreign subsidiary to be run independently. c ○ 2003 Peking University Press

This paper studies corporate governance when a ¯rm faces imperfect competition. We derive ¯rms ' decisions from utility maximisation by individuals. This reduces the usual monopoly distortion. We ¯nd that corporate governance can e®ect the equilibrium in the product (or input) markets. This enables us to endogenise the objective function of the ¯rm. If the ¯rm cannot commit not to change its constitution, we ¯nd a Coase-like result where all market power is lost in the limit. The model can be used to examine the e®ects of encouraging stakeholder representation. Address for Correspondence

This paper examines the welfare effects of vertical integration by an “information gatekeeper” into the product market it serves. Both the integrated gatekeeper and competing firms in the product market earn higher profits, but social welfare declines.