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Platform Sharing in a Differentiated Duopoly

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  • Arghya Ghosh
  • Hodaka Morita

Abstract

"Platform sharing across manufacturers has become common practice in the automobile industry. Although platform sharing reduces the degree of product differentiation, manufacturers can reduce their procurement costs by taking advantage of the commonality of components. We investigate this trade-off through analyzing a model that incorporates manufacturer-supplier relationships into a differentiated duopoly model, and find an interesting inverse relationship between the advantage of platform sharing and manufacturers' costs to communicate with their potential suppliers. We also explore welfare consequences of the Internet trading exchanges by considering an extension that allows the manufacturers to jointly establish a business-to-business electronic marketplace." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 15 (2006)
Issue (Month): 2 (06)
Pages: 397-429

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Handle: RePEc:bla:jemstr:v:15:y:2006:i:2:p:397-429

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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Cited by:
  1. Nisvan Erkal, 2003. "Buyer-Supplier Interaction, Asset Specificity, And Product Choice," Department of Economics - Working Papers Series 885, The University of Melbourne.
  2. Bourreau, Marc & Dogan, PInar, 2010. "Cooperation in product development and process R&D between competitors," International Journal of Industrial Organization, Elsevier, vol. 28(2), pages 176-190, March.
  3. Ghosh, Arghya & Morita, Hodaka, 2008. "An economic analysis of platform sharing," Journal of the Japanese and International Economies, Elsevier, vol. 22(2), pages 164-186, June.
  4. Ghosh, Arghya & Morita, Hodaka, 2012. "Competitor collaboration and product distinctiveness," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 137-152.

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