Essays on Competition and Technology Strategies

Essays on Competition and Technology Strategies

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This dissertation focuses on competition and technology strategies in three scenarios. Chapter 1 examines whether a lock-in strategy will indeed benefit proprietary software vendors in the competition. Developing a two-period duopoly model, we find that the answer could be either way. Lock-in strategy may be counter-productive in competing against open source software. This is in contrast to the competition between two proprietary software providers, whereas lock-in strategy could be beneficial under certain conditions. We find that lock-in reduces social welfare, but certain customers may be better off with lock-in. Finally, we show that the lock-in strategy works differently for different types of customers in the software market (i.e. forward-looking vs. myopic customers). Chapter 2 examines the impact of competition from open source software on proprietary software providers. We use an analytical model to capture two important features of open source software: (1) its zero licensing price, and (2) its lower usability compared with proprietary software. We find that competition from open source software can induce the proprietary software provider to increase its software quality and price relative to the monopoly case when the proprietary software provider's cost of enhancing software quality is moderate. This result is different from those in prior literature. Surprisingly, we also find that competition from open source software can also lead to a reduction in social welfare. Chapter 3 studies information transparency in a two-level supply chain with competing firms in both upstream and downstream. We find that information transparency can create value for the overall e-market, yet it affects downstream manufacturers and upstream suppliers very differently: one side will be hurt, depending on the competition mode (Cournot or Bertrand) in the downstream. Unfortunately, it never unanimously benefits the two sides; conflict of interest persists. To deal with this issue, we propose a pricing mechanism for the e-market operator to internalize informational benefits among suppliers and manufacturers so that the online market can be sustainable. Finally, we find that information transparency reduces consumer surplus. This is a surprising result given expectation that IT could create substantial value to consumers.Finally, we find that information transparency reduces consumer surplus. This is a surprising result given expectation that IT could create substantial value to consumers.


Title:Essays on Competition and Technology Strategies
Author: Zach Zhizhong Zhou
Publisher:ProQuest - 2008
ISBN-13:

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