We characterize the firms' equilibrium target marketing strategies.
The documented ineffectiveness of regulatory mandates suggests that alternative mechanisms capable of altering firms' equilibrium reporting practices likely contribute to the significant global reporting convergence observed over the past three decades (e.g., Land and Lang ).
To avoid this less interesting possibility, we concentrate on the case where some positive fraction of consumers do search beyond their local firm in equilibrium.
18 First, the model predicts that consumers should search beyond their local firm in equilibrium (where p i = p ⁎ ) if they receive a local match value lower than x ^ − s.
However, even after searching the entire market, a consumer will not want to purchase from any of the firms with probability, Pr (ε < p ⁎ ) Pr (ε < p ⁎ + s ) n − 1, such that each firm's equilibrium demand now reduces to (1 / n ) [ 1 − G (p ⁎ ) G (p ⁎ + s ) n − 1 ].
Even with few "altruistic" firms, the equilibrium might involve no exploitation, as long as there is sufficient amount of competition.
Proposition 1 Let 2d - s ≤ 0. In equilibrium, firm 2 chooses a price p 2 = s - d, and firm 1 sells nothing.
In the Markov perfect equilibrium firm 2 has the following entry condition: (16) V 2 MP − F > 0 : enter, V 2 MP − F ≤ 0 : do not enter, where V 2 MP denotes firm 2's value function at time t.
Comparing the steady state solutions reveals that the capital stock as well as the investments of the monopolist always exceed that of a duopoly firm (Markov perfect equilibrium), i.e. K ^ 1 M = A − b (r + δ ) 2 + δ c (r + δ ) > A − b (r + δ ) 3 + δ c (r + δ ) − σ π − c (r + δ ) = K ^ 1 MP, where σ < 0 and π < 0 are parameters of the value function (see Reynolds, 1987 for details).
We demonstrate how the introduction of competition among input suppliers will achieve the double goal of making components available at average cost without sacrificing the ability to exploit economies of scale because in equilibrium firms will delegate outsourcing of production to a joint subcontractor.
If unions may firstly choose the organization of bargaining, in the presence of complement (substitute) goods, independent (coordinated) negotiations with firms arise as equilibrium.
