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This paper aims to examine the equilibrium limit price charged by a producer trying to deter the entry of a firm that can choose one of the two markets of complementary goods.

The authors model a dynamic game of incomplete information solved using a “perfect Bayesian equilibrium” approach.

It is shown that an incumbent will be willing to spend more resources – i.e. charge a lower limit price – to deter entry into its market as products become more complementary. This is because additional benefits are gained from entry deterrence by facing a more competitive market in the complementary product. The additional benefits of entry deterrence are shown to be a function of the degree of complementarity between goods.

A managerial implication of this article is that firms are willing to compete more fiercely to send an entrant to the other's incumbent market as the degree of complementarity between goods increases. An interesting conclusion that is derived from the above analysis is that managers should invest to understand the interdependences (e.g. complementarities) of the goods they sell, since the strategic variables chosen to compete may be affected by them, in some cases in a non‐trivial way.

From a public policy perspective, the main contribution of this paper is to point out that regulators who analyze predatory pricing, or other (probably) illegal “low‐price strategies”, should consider the degree of complementarity between goods and its effect on pricing.

As far as the authors' knowledge goes, there are no other papers that analyze entry decisions involving multiple markets of complementary goods.

The constructs of re-deployment and co-deployment have been central to discussions of scope economies in diversified firms. We argue however that these constructs are also significant in the context of single-business firms. Increasingly, changes in technology and demand preferences have provided opportunities for entrants to attack incumbents with a different business model, one that may neutralize the incumbent’s advantage for at least some set of customers (e.g., Netflix vs. Blockbuster). In such a context incumbents often respond by modifying their business model. We note that several of the business model-altering responses of the incumbent can be characterized in terms of co-deployment and re-deployment benefits and costs, where co-deployment benefits/cost apply to the scope economies/diseconomies in running multiple business models within the same firm and re-deployment benefits/costs apply to the implications of moving assets from one business model to another. We then examine the set of strategic choices faced by the incumbent in competing with an entrant with a different business model. We identify five set of factors that are likely to influence the decision to choose between these alternatives – uncertainty spawned by the new business model, market segment targeted by the new model, the within-business-across-business-model co-deployment and re-deployment benefits and costs, the across-business co-deployment and re-deployment benefits and costs, and the incumbent’s prior performance history. Although some of these choices have seen some work, most remain relatively underexplored in the strategy literature. We highlight the potential for research in this area with a set of propositions that identify key conditions that should hold true for a particular strategic choice to be picked by an incumbent.

In this study, we develop understanding of factors that shape the propensity of market incumbents to collaborate in response to the threat posed by new market entrants. We are particularly interested in instances when a market's competitive structure becomes unsettled by new entrants who engage in nonconforming strategic tactics. In such situations, we propose two factors – strategic similarity among competitors and market-share instability – will systematically shape competitors' collaborative response to new entrants. To test our theory, we use data on strategic tactics and collaborative dynamics in the US airline industry from 1989 to 2010. We demonstrate that greater strategic similarity among a market's incumbents increases the likelihood of cooperation in response to the threat of a nonconforming new entrant, while greater market-share instability reduces cooperative response. Through this study, we extend existing understanding of the contextual circumstances under which established competitors recognize their mutual interests and band together.

We show that, in the US telecommunications industry, market participants have a sophisticated understanding of the political process, and behave strategically in their allocation of contributions to state legislators as if seeking to purchase influence over regulatory policy. We find that interests respond defensively to contributions from rivals, take into account the configuration of support available to them in both the legislature and the regulatory commission, and vary their contributions according to variations in relative costs for influence by different legislatures. This strategic behavior supports a theory that commercially motivated interests contribute campaign resources in order to mobilize legislators to influence the decisions of regulatory agencies. We also report evidence that restrictions on campaign finance do not affect all interests equally. The paper therefore provides positive evidence on the nature and effects of campaign contributions in regulated industries where interest group competition may be sharp.

In a dynamic environment where underlying competition is “for the market,” this chapter examines what happens when entrants and incumbents can instead negotiate for the market. For instance, this might arise when an entrant innovator can choose to license to or be acquired by an incumbent firm (i.e., engage in cooperative commercialization). It is demonstrated that, depending upon the level of firms’ potential dynamic capabilities, there may or may not be gains to trade between incumbents and entrants in a cumulative innovation environment; that is, entrants may not be adequately compensated for losses in future innovative potential. This stands in contrast to static analyses that overwhelmingly identify positive gains to trade from such cooperation.

For an entrant platform in the on-demand service market, choosing an appropriate employment model is critical. This study explores how the entrant optimally chooses the employment model to achieve better performance and investigates the optimal pricing strategies and wage schemes for both incumbent and entrant platforms.

Based on the Hotelling model, the authors develop a game-theoretic framework to study the incumbent's and entrant's optimal service prices and wage schemes. Moreover, the authors determine the entrant's optimal employment model by comparing the entrant's optimal profits under different market configurations and analytically analyze the impacts of some critical factors on the platforms' decision-making.

This study reveals that the impacts of the unit misfit cost of suppliers or consumers on the pricing strategies and wage schemes vary with different operational efficiencies of platforms. Only when both the service efficiency of contractors and the basic employee benefits are low, entrants should adopt the employee model. Moreover, a lower unit misfit cost of suppliers or consumers makes entrants more likely to choose the contractor model. However, the service efficiency of contractors has nonmonotonic effects on the entrant's decision.

This study focuses on an entrant's decision on the optimal employment model in an on-demand service market, considering the competition between entrants and incumbents on both the supplier and consumer sides, which has not been investigated in the prior literature.

This study aims to develop a model of learning-by-hiring in which knowledge gains may occur at the time of recruitment but also after recruitment when other incumbent organizational members assimilate a recruit’s knowledge. The author’s model predicts that experienced recruits are more likely to catalyze change to their organization’s core technological capabilities.

The continuous-time parametric hazard rate regressions predict core technological change in a long panel (1970–2017) of US biotechnology industry patent data. The author uses over 140,000 patents to model the evolution of knowledge of over 52,000 scientists and over 4,450 firms. To address endogeneity concerns, the author uses the Heckman selection method and does robustness tests using a difference-in-difference analysis.

The author finds that a hire’s prior research and development (R&D) experience helps overcome inertia arising from her or his new-to-an-organization “distant” knowledge to increase the likelihood of core technological change. In addition, while the author finds that incumbent organizational members resist technological change, experienced hires may effectively induce them to adopt new ways of doing things. This is particularly the case when hires collaborate with incumbents in R&D projects. Understanding the effects of hiring on core technological change, therefore, benefits from an assessment of hire R&D experience and its effects on incumbent inertia in an organization.

First, the author does not recommend managers to hire scientists with considerable distant knowledge only as this may be detrimental to core technological change. Second, the author recommends organizations striving to effectuate technological change to hire people with considerable prior R&D experience as this confers them with the ability to influence other members and socialize incumbent members. Third, the author recommends that managers hire people with both significant levels of prior experience and distant knowledge as they are complements. Finally, the author recommends managers to encourage collaboration between highly experienced hired scientists and long-tenured incumbent organizational members to facilitate incumbent learning, socialization and adoption of new ways of doing things.

This study develops a model of learning-by-hiring, which, to the best of the authors’ knowledge, is the first to propose, test and advance KM literature by showing the effectiveness of experienced hires to stimulate knowledge diffusion and core technological change over time after being hired. This study contributes to innovation, organizational learning and strategy literatures.

The purpose of this study is to develop a conceptual framework for defensive strategy by integrating market entry modes and the typology of firms suggested by Day and Nedungandi, and to attempt to propose how local incumbent firms utilize their mental models in order to react against market entry of new competition in global markets.

The theoretical perspective adopted in the study is how mental models used by incumbent firms influence their reaction to market entry of new competition in developing defensive strategies to defend their markets.

Mental models of incumbent firms, categorized as self‐centered, competitor‐centered, customer‐oriented, and market‐driven firms, impact their reaction and the development of defensive marketing strategies against market entrants using a variety of market entry modes in global markets.

The paper presents an extensive review of the defensive marketing and mental models literature and shows how the way in which incumbent firms react to market entry of new competition contributes to understanding of incumbent reaction to market entry of new competition in global markets. Research directions for future research and managerial implications are also provided.

The purpose of this paper is to assess the degree to which auctioning the right to provide universal service is a viable option in developed countries with high teledensity and near ubiquitous fixed line and mobile networks. The paper also aims to provide signposts on the types of issues regulators need to consider and resolve when designing auctioning mechanisms for the competitive provision of universal service.

The paper examines the nature and scope of universal service, the approaches that have been used to identify the costs of universal service provision and the difficulties in using an auction process to allocate the right to provide universal service in countries with near ubiquitous network infrastructure. Australia is used as a case study on the difficulties of using auctions to encourage new entry in universal service areas served by a powerful incumbent. The paper also examines the types of issues regulators need to resolve when designing auction mechanisms for universal service provision.

The paper concludes that for developed countries, it is unclear whether the use of auctions for the provision of universal service will have the desired effect of ensuring a market‐based approach to service provision. This is because the risks associated with becoming an alternative universal service provider are likely to outweigh the benefits of doing so. Further, the risks faced by an alternative universal service provider are not borne by the incumbent operator thus further increasing the disincentive to bid for the right to provide universal service. The paper also concludes that the practical design of the universal service rights and obligations which will be attached to a winning bidder's license conditions is an extremely important mechanism by which some of the risks to potential universal service providers can be overcome.

The paper stimulates thinking about whether universal service auctions are a viable means of providing universal service in developed countries. In presenting empirical evidence of the difficulties in using auctions to introduce competition in universal service provision, the paper may provide valuable input to the regulatory proceedings associated with introducing universal service contestability arrangements that are currently being conducted in various countries.