Welfare‐improving cooperation with a consumer‐friendly multiproduct corporation

We consider a multiproduct corporation that adopts consumer‐friendly activities and cooperates with single‐plant firms for improving welfare. We show that full cooperation is socially beneficial if products are strong complements, whereas partial cooperation with higher consumer‐friendly activities...

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Bibliographic Details
Published inManagerial and decision economics Vol. 41; no. 7; pp. 1144 - 1155
Main Authors García, Arturo, Leal, Mariel, Lee, Sang‐Ho
Format Journal Article
LanguageEnglish
Published Chichester Wiley Periodicals Inc 01.10.2020
Subjects
Alliances
Cooperation
Endogenous
Ownership
Welfare
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Summary:We consider a multiproduct corporation that adopts consumer‐friendly activities and cooperates with single‐plant firms for improving welfare. We show that full cooperation is socially beneficial if products are strong complements, whereas partial cooperation with higher consumer‐friendly activities is beneficial if products are substitutes. We also examine a sequential choice game of endogenous cooperation in which the multiproduct corporation can induce (partial or full) cooperation and show that our findings are still consistent at equilibrium. We finally compare different ownership of the single‐plant firms and find that foreign ownership decreases the benefits of cooperation.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.3161