Strategic Brand Proliferation: Monopoly versus Duopoly
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Kentaro Inomata
Abstract
The aim of this paper is to investigate whether the existence of a rival firm can encourage another firm to proliferate its brand. To do so, we compare the incentive to invest in brand proliferation in monopoly and the one in duopoly. We find that in duopoly there are asymmetric equilibria where only one firm proliferates its brand but the other does not even if they are identical. In that case, the incentive to invest in brand proliferation is stronger in duopoly than in monopoly if two firms provide closer substitutes. Further we also show that the multi-product firm increases its profit by providing closer substitutes. It implies that an incumbent can deter entry with commitment by proliferating its brand. Such a result is in contrast with Judd [RAND J. Econ 16 (1985) 153].
Acknowledgments
I would like to thank the editor Tobias Wenzel and an anonymous referee for their helpful comments and many suggestions. I am also indebted to Junichiro Ishida, Shingo Ishiguro and Noriaki Matsushima, Takanori Adachi, Satoshi Fukuda, Jun-ichi Itaya, Naoto Jinji, Akio Kawasaki, Keisuke Kawata, Hiroshi Kitamura, Akira Miyaoka, Tadashi Morita, Masaki Nakabayashi, Tatsuhiko Nariu, Takashi Shimizu, Tetsuya Shinkai, Tadanobu Tanno, Yoshihiro Yoshida, the seminar participants at Kyoto University (2013), Kyoto Sangyo University (2013), and Osaka University (2012, 2013) and the participants at the annual meeting of JAAE (2011), JEA (2012). Furthermore, I am very grateful to Paolo Garella, Adriaan Soetevent, and the participants of EARIE (2014) at Bocconi University for important comments.
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Artikel in diesem Heft
- Frontmatter
- Research Articles
- FRAND Licensing of Standard-Essential Patents: Comparing Realistic Ex-Ante and Ex-Post Contracts
- To Commit or Not to Commit in Product-Innovation Timing Games
- Coordinated Minimum Wage Policies: Impacts on EU-Level Income Inequality
- Regulatory Contestability and Cost Pass-Through
- Explaining the Economic Characteristics of Different International Peacekeeping Institutions
- Setting Reserve Prices in Repeated Procurement Auctions
- Public and Private School Grade Inflation Patterns in Secondary Education
- Estimating Labor Supply Elasticities in Korea: The Role of Limited Commitment Between Spouses
- Strategic Brand Proliferation: Monopoly versus Duopoly
- Letter
- Parental Investments During Labor Shocks: Evidence from Vietnam’s Marine Disaster
Artikel in diesem Heft
- Frontmatter
- Research Articles
- FRAND Licensing of Standard-Essential Patents: Comparing Realistic Ex-Ante and Ex-Post Contracts
- To Commit or Not to Commit in Product-Innovation Timing Games
- Coordinated Minimum Wage Policies: Impacts on EU-Level Income Inequality
- Regulatory Contestability and Cost Pass-Through
- Explaining the Economic Characteristics of Different International Peacekeeping Institutions
- Setting Reserve Prices in Repeated Procurement Auctions
- Public and Private School Grade Inflation Patterns in Secondary Education
- Estimating Labor Supply Elasticities in Korea: The Role of Limited Commitment Between Spouses
- Strategic Brand Proliferation: Monopoly versus Duopoly
- Letter
- Parental Investments During Labor Shocks: Evidence from Vietnam’s Marine Disaster
