• Journal of Korea Trade
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• v.23 no.3
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• pp.105-117
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• 2019

Purpose - Underdog positioning is often used to evoke a positive attitude when interacting with consumers. However, little research has been conducted on the market competition structure and innovation contexts in which underdog positioning produces the most impact. This research aims to investigate unexplored boundary conditions of underdog positioning and addresses two issues: market structures (oligopoly vs monopolistic competition) and perceived firm innovativeness (PFI). Design/methodology - Two one-way ANOVA designs (market structures: monopolistic competitions vs. oligopoly; perceived frim innovativeness: strong vs. weak) were randomly assigned to 297 graduate and undergraduate students (52 % female) majoring in business. Study 1 examined the effect of underdog positioning on consumer attitudes in the different market structures. Study 2 investigated the relationship between underdog effect and consumer attitudes through viewing conditions that varied in PFI. Findings - Drawing on the results of the study, the authors conclude that underdog positioning is effective to generate more positive consumer attitudes when employed in the market structure of monopolistic competition rather than oligopoly. Moreover, both underdog and top dog positioning are likely to generate more positive consumer attitudes when accompanied with strong PFI than weak PFI. Originality/value -This is the first study to distinguish between monopolistic competition and oligopoly market structures with underdog positioning as well as to demonstrate a positive effect of PFI, regardless of the type of brand narratives.

• The Transactions of the Korean Institute of Electrical Engineers A
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• v.55 no.5
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• pp.214-219
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• 2006

Oligopoly differs from perfect competition and monopoly in that a firm must consider rival firms' behavior to determine its own best policy. This interrelationship among firms is the issue examined in this paper. In the oligopoly market, the complete information market means that each producer has full information about itself, the market, and its rivals. That is, each producer knows the market demand function, its own cost function and the cost functions of rivals. On the other hand, the incomplete information market means that in general each producer lacks full information about the market or its rivals. Here, we assume that each firm doesn't know the cost functions and the strategic biddings of its rivals. The main purpose of this paper is to analyze firm' strategic behaviors and equilibrium in an electricity market with incomplete information. In the case study, the complete information market and the incomplete market are compared at the Nash Equilibrium from the viewpoints of market price, transaction quantities, consumer benefits, and Social Welfare.

• KIEE International Transactions on Power Engineering
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• v.5A no.4
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• pp.403-411
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• 2005

At present, the Cournot model is one of the most commonly used theories to analyze the gaming situation in an oligopoly type market. However, several problems exist in the successful application of this model to the electricity market. The representative one is obtaining the inverse demand curve able to be induced from the relationship between market price and demand response. In the Cournot model, each player offers their generation quantity to obtain maximum profit, which is accomplished by reducing their quantity compared with available total capacity. As stated above, to obtain the probable Cournot equilibrium to reflect the real market situation, we have to induce the correct demand function first of all. Usually the correlation between price and demand appears over the long-term through statistical data analysis (for example, regression analysis) or by investigating consumer utility functions of several consumer groups classified as residential, industrial, and commercial. However, the elasticity has a tendency to change continuously according to the total market demand size or the level of market price. Therefore it should be updated as the trading period passes by. In this paper we propose a method for inducing and updating this price elasticity of demand function for more realistic market equilibrium.

• Asia Marketing Journal
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• v.16 no.1
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• pp.35-69
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• 2014

The impact of competition on pricing has been studied in the context of counterfactual merger analyses where expected optimal prices in a hypothetical monopoly are compared with observed prices in an oligopolistic market. Such analyses would typically assume static decision making by consumers and firms and thus have been applied mostly to data obtained from consumer packed goods such as cereal and soft drinks. However such static modeling approach is not suitable when decision makers are forward looking. When it comes to the markets for durable products with indirect network effects, consumer purchase decisions and firm pricing decisions are inherently dynamic as they take into account future states when making purchase and pricing decisions. Researchers need to take into account the dynamic aspects of decision making both in the consumer side and in the supplier side for such markets. Firms in a two-sided market typically subsidize one side of the market to exploit the indirect network effect. Such pricing behaviors would be more prevalent in competitive markets where firms would try to win over the battle for standard. While such qualitative expectation on the relationship between pricing behaviors and competitive structures could be easily formed, little empirical studies have measured the extent to which the distinct pricing structure in two-sided markets depends on the competitive structure of the market. This paper develops an empirical model to measure the impact of competition on optimal pricing of durable products under indirect network effects. In order to measure the impact of exogenously determined competition among firms on pricing, we compare the equilibrium prices in the observed oligopoly market to those in a hypothetical monopoly market. In computing the equilibrium prices, we account for the forward looking behaviors of consumers and supplier. We first estimate a demand function that accounts for consumers' forward-looking behaviors and indirect network effects. And then, for the supply side, the pricing equation is obtained as an outcome of the Markov Perfect Nash Equilibrium in pricing. In doing so, we utilize numerical dynamic programming techniques. We apply our model to a data set obtained from the U.S. video game console market. The video game console market is considered a prototypical case of two-sided markets in which the platform typically subsidizes one side of market to expand the installed base anticipating larger revenues in the other side of market resulting from the expanded installed base. The data consist of monthly observations of price, hardware unit sales and the number of compatible software titles for Sony PlayStation and Nintendo 64 from September 1996 to August 2002. Sony PlayStation was released to the market a year before Nintendo 64 was launched. We compute the expected equilibrium price path for Nintendo 64 and Playstation for both oligopoly and for monopoly. Our analysis reveals that the price level differs significantly between two competition structures. The merged monopoly is expected to set prices higher by 14.8% for Sony PlayStation and 21.8% for Nintendo 64 on average than the independent firms in an oligopoly would do. And such removal of competition would result in a reduction in consumer value by 43.1%. Higher prices are expected for the hypothetical monopoly because the merged firm does not need to engage in the battle for industry standard. This result is attributed to the distinct property of a two-sided market that competing firms tend to set low prices particularly at the initial period to attract consumers at the introductory stage and to reinforce their own networks and eventually finally to dominate the market.

• Journal of Institute of Control, Robotics and Systems
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• v.17 no.4
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• pp.304-312
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• 2011

In an oligopolistic market, only a few firms account for most or all of total production, e.g., automobile, steel, and computer industries. For a dynamic oligopolistic market with two firms competing in quantities, we show that supervisory control theory of discrete event systems provides a novel approach to solve the dynamic oligopoly problem with the aim of maximizing the profits of both firms. Specifically, we show that the controllability, observability, and nonblocking property (which are the core concepts in supervisory control theory) are the necessary and sufficient conditions for two oligopolistic firms in disequilibrium to eventually reach equilibrium states of maximizing the profits of both firms.

• International Area Studies Review
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• v.14 no.3
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• pp.35-60
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• 2010

In this paper, we develop a dynamic structural model based on a dynamic supergame and measure market power for the Dallas-Forth Worth fluid milk market in the U.S. In particular, we compare the conduct parameter estimates from a static model with that from the dynamic model and illustrate bias in the market-power measure in a static model. And we also analyze the cyclical behavior of firm conduct. We find that the conduct parameter in a static model underestimates true market power if firms' behaviors are posited by a dynamic oligopoly game. We also verify that firm conduct in the Dallas-Forth Worth fluid milk market is countercyclical against demand shocks and expected future cost shocks. Our results indicate that the firms' conduct in the Dallas-Forth Worth fluid milk market is consistent with what dynamic oligopoly models predict. This implies that the firms consider not only the contemporary reactions of the other firms' but also future market competition. Therefore, the measurement of market power requires the specification of fully dynamic pricing relationship.

• International Commerce and Information Review
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• v.16 no.5
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• pp.3-25
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• 2014

The megatrends of the Korean distribution industry market in 2014 reflect opportunities in parallel import & overseas direct purchase. Korean government addressed that "Monopoly & Oligopoly consumer goods import improvement plan" to stabilizing importing goods prices and domestic consumers' burden relief through accelerating market competition. and moreover it is to improving distribution channel and promoting parallel import market business. The Korean market is very unique in that consumers' real sensory index of open up importation effect level is low, but nominal open up importation effect level is high. This is due to difficulties in creating a proper importing goods distribution market and alternative importing routes are very rare. Thus, the purpose of this study is to analyze the market situation and parallel import to improve Korean government's "Monopoly & Oligopoly consumer goods import improvement plan" policy for the revitalization of the domestic market economy and to boost up a new growth engine industry.

• KIPS Transactions on Computer and Communication Systems
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• v.1 no.3
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• pp.133-142
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• 2012

Cournot model is one of representative models among many game theoretic approaches available for analyzing competitive market models. Recent years have witnessed various kinds of attempts to model competitive electricity markets using the Cournot model. Cournot model is appropriate for oligopoly market which is one characteristic of electric power industry requiring huge amount of capital investment. When we use Cournot model for the application to electricity market, it is prerequisite to assume the downward sloping demand curve in the right direction. Generators in oligopoly market could try to maximize their profit by exercising the market power like physical or economic withholding. However advanced electricity markets also have demand side bidding which makes it possible for the demand to respond to the high market price by reducing their consumption. Considering this kind of demand reaction, Generators couldn't abuse their market power. Instead, they try to find out an equilibrium point which is optimal for both sides, generators and demand. This paper suggest a quantitative analysis between market variables based on econometrics for estimating demand responses in smart grid environment.

• Proceedings of the KIEE Conference
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• 2005.07a
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• pp.778-780
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• 2005

Electric power industry throughout the world is restructured. The electric power industry has a characteristics of an oligopoly with an imperfect competition. In Korea rules, all information is not available. So the strategy under such incomplete information market differ firm those under complete information system in game theory. This paper presents a analysis technique if Korea ma rket model with incomplete information.

• Journal of Navigation and Port Research
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• v.44 no.2
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• pp.128-135
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• 2020

Long-term shipping contracts represent the cooperative and coexisting relationships between the shipping and steel industries. Yet, differences between the contract forms for iron ore and steel products have emerged. Specifically, the large proportion of consecutive voyage charters (CVC) is being applied in the iron ore trade, whereas the contract of affreightment (COA) is proportionally higher for shipping steel products. The literature review and in-depth interviews in this study identified through the research model, the characteristics of the shipping and market structure in both markets have significantly contributed to the preference of different long-term contracts. It has been determined that the mutual oligopoly market structure and the characteristics of shipping such as, the small number of suitable vessels in the market, the single fixed load/discharge ports, the long-distance voyages, and the potential risks for fatal accidents because of cargo liquefaction, for the iron ore trade, provide higher contribution to the preference of CVC contracts. In contrast, the consignor oligopoly market structure and the shipping characteristics, such as the greater number of suitable vessels available in the market, the variation in ports, the cargo quantity per shipment, the various load/discharge ports, and the need for experienced carriers for steel product loading in the steel product trade has shown higher preference on the COA contracts as the consignors with superiority over the shipowners, resulting in favorable contract types and conditions for the consignors.