IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v54y2007i2p162-175.html
   My bibliography  Save this article

The strategic effects of a merger upon supplier interactions

Author

Listed:
  • Stephen M. Gilbert
  • Gang Yu
  • Yusen Xia

Abstract

We consider how a merger between two naturally differentiated dealers affects their interactions with a common supplier and identify conditions under which the merger can increase or decrease the combined net worth of the two firms. Among other things, we find that the attractiveness of merging depends upon the extent to which end demand can be stimulated by either an upstream supplier or the dealers. Specifically, the greater the supplier's ability to invest in stimulating end demand, the more likely it is that the naturally differentiated firms will be better off operating independently than merging. On the other hand, if the greatest opportunities for stimulating demand are through the service that is provided by the dealers, then merging their operations will be more attractive. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2007

Suggested Citation

  • Stephen M. Gilbert & Gang Yu & Yusen Xia, 2007. "The strategic effects of a merger upon supplier interactions," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(2), pages 162-175, March.
    • Handle: RePEc:wly:navres:v:54:y:2007:i:2:p:162-175
    DOI: 10.1002/nav.20198
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/nav.20198
    Download Restriction: no
    File URL: https://libkey.io/10.1002/nav.20198?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Anne T. Coughlan & Birger Wernerfelt, 1989. "On Credible Delegation by Oligopolists: A Discussion of Distribution Channel Management," Management Science, INFORMS, vol. 35(2), pages 226-239, February.
    2. Rajeev K. Tyagi, 1999. "On the Effects of Downstream Entry," Management Science, INFORMS, vol. 45(1), pages 59-73, January.
    3. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    4. Timothy W. McGuire & Richard Staelin, 1983. "An Industry Equilibrium Analysis of Downstream Vertical Integration," Marketing Science, INFORMS, vol. 2(2), pages 161-191.
    5. Abel P. Jeuland & Steven M. Shugan, 1983. "Managing Channel Profits," Marketing Science, INFORMS, vol. 2(3), pages 239-272.
    6. Ganesh Iyer, 1998. "Coordinating Channels Under Price and Nonprice Competition," Marketing Science, INFORMS, vol. 17(4), pages 338-355.
    7. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
    8. S. Chan Choi, 1991. "Price Competition in a Channel Structure with a Common Retailer," Marketing Science, INFORMS, vol. 10(4), pages 271-296.
    9. Perry, Martin K. & Porter, Robert H., 1990. "Can resale price maintenance and franchise fees correct sub-optimal levels of retail service?," International Journal of Industrial Organization, Elsevier, vol. 8(1), pages 115-141.
    10. Werden, Gregory J, 1996. "A Robust Test for Consumer Welfare Enhancing Mergers among Sellers of Differentiated Products," Journal of Industrial Economics, Wiley Blackwell, vol. 44(4), pages 409-413, December.
    11. Langlois, Richard N., 1992. "External Economies and Economic Progress: The Case of the Microcomputer Industry," Business History Review, Cambridge University Press, vol. 66(1), pages 1-50, April.
    12. Eunkyu Lee & Richard Staelin, 1997. "Vertical Strategic Interaction: Implications for Channel Pricing Strategy," Marketing Science, INFORMS, vol. 16(3), pages 185-207.
    13. Martin A. Lariviere & Evan L. Porteus, 2001. "Selling to the Newsvendor: An Analysis of Price-Only Contracts," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 293-305, May.
    14. Dietmar Harhoff, 1996. "Strategic Spillovers and Incentives for Research and Development," Management Science, INFORMS, vol. 42(6), pages 907-925, June.
    15. Werden, Gregory J & Froeb, Luke M, 1994. "The Effects of Mergers in Differentiated Products Industries: Logit Demand and Merger Policy," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 407-426, October.
    16. Minakshi Trivedi, 1998. "Distribution Channels: An Extension of Exclusive Retailership," Management Science, INFORMS, vol. 44(7), pages 896-909, July.
    17. Sudheer Gupta & Richard Loulou, 1998. "Process Innovation, Product Differentiation, and Channel Structure: Strategic Incentives in a Duopoly," Marketing Science, INFORMS, vol. 17(4), pages 301-316.
    18. Andy A. Tsay & Narendra Agrawal, 2000. "Channel Dynamics Under Price and Service Competition," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 372-391, August.
    19. Gilbert, Stephen M. & Cvsa, Viswanath, 2003. "Strategic commitment to price to stimulate downstream innovation in a supply chain," European Journal of Operational Research, Elsevier, vol. 150(3), pages 617-639, November.
    20. Braid, Ralph M., 1999. "The price and profit effects of horizontal mergers in two-dimensional spatial competition," Economics Letters, Elsevier, vol. 62(1), pages 113-119, January.
    21. Charles A. Ingene & Mark E. Parry, 1995. "Channel Coordination When Retailers Compete," Marketing Science, INFORMS, vol. 14(4), pages 360-377.
    22. Ralph A. Winter, 1993. "Vertical Control and Price Versus Nonprice Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(1), pages 61-76.
    23. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yunlong Yu & Tiaojun Xiao & Zhangwei Feng, 2020. "Price and cold-chain service decisions versus integration in a fresh agri-product supply chain with competing retailers," Annals of Operations Research, Springer, vol. 287(1), pages 465-493, April.
    2. Wang, Jingqi & Shin, Hyoduk & Zhou, Qin, 2021. "The optimal investment decision for an innovative supplier in a supply chain," European Journal of Operational Research, Elsevier, vol. 292(3), pages 967-979.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xia, Yusen & Gilbert, Stephen M., 2007. "Strategic interactions between channel structure and demand enhancing services," European Journal of Operational Research, Elsevier, vol. 181(1), pages 252-265, August.
    2. Ghosh, Debabrata & Shah, Janat, 2015. "Supply chain analysis under green sensitive consumer demand and cost sharing contract," International Journal of Production Economics, Elsevier, vol. 164(C), pages 319-329.
    3. Lu, Jye-Chyi & Tsao, Yu-Chung & Charoensiriwath, Chayakrit, 2011. "Competition under manufacturer service and retail price," Economic Modelling, Elsevier, vol. 28(3), pages 1256-1264, May.
    4. Yunchuan Liu & Rajeev K. Tyagi, 2011. "The Benefits of Competitive Upward Channel Decentralization," Management Science, INFORMS, vol. 57(4), pages 741-751, April.
    5. Iida, Tetsuo, 2012. "Coordination of cooperative cost-reduction efforts in a supply chain partnership," European Journal of Operational Research, Elsevier, vol. 222(2), pages 180-190.
    6. Sudheer Gupta, 2008. "Research Note—Channel Structure with Knowledge Spillovers," Marketing Science, INFORMS, vol. 27(2), pages 247-261, 03-04.
    7. de Matta, Renato & Lowe, Timothy J. & Zhang, Dengfeng, 2017. "Competition in the multi-sided platform market channel," International Journal of Production Economics, Elsevier, vol. 189(C), pages 40-51.
    8. Wu, Cheng-Han, 2012. "Price and service competition between new and remanufactured products in a two-echelon supply chain," International Journal of Production Economics, Elsevier, vol. 140(1), pages 496-507.
    9. Edirisinghe, N.C.P. & Bichescu, B. & Shi, X., 2011. "Equilibrium analysis of supply chain structures under power imbalance," European Journal of Operational Research, Elsevier, vol. 214(3), pages 568-578, November.
    10. Sreekumar R. Bhaskaran & Stephen M. Gilbert, 2009. "Implications of Channel Structure for Leasing or Selling Durable Goods," Marketing Science, INFORMS, vol. 28(5), pages 918-934, 09-10.
    11. Greg Shaffer & Florian Zettelmeyer, 2002. "When Good News About Your Rival Is Good for You: The Effect of Third-Party Information on the Division of Channel Profits," Marketing Science, INFORMS, vol. 21(3), pages 273-293, November.
    12. Wu, Cheng-Han & Chen, Chieh-Wan & Hsieh, Chung-Chi, 2012. "Competitive pricing decisions in a two-echelon supply chain with horizontal and vertical competition," International Journal of Production Economics, Elsevier, vol. 135(1), pages 265-274.
    13. Andy A. Tsay & Narendra Agrawal, 2000. "Channel Dynamics Under Price and Service Competition," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 372-391, August.
    14. Li, Bai-Xun & Zhou, Yong-Wu & Li, Ji-zi & Zhou, Shi-ping, 2013. "Contract choice game of supply chain competition at both manufacturer and retailer levels," International Journal of Production Economics, Elsevier, vol. 143(1), pages 188-197.
    15. Ingene, Charles A. & Taboubi, Sihem & Zaccour, Georges, 2012. "Game-Theoretic Coordination Mechanisms in Distribution Channels: Integration and Extensions for Models Without Competition," Journal of Retailing, Elsevier, vol. 88(4), pages 476-496.
    16. Tony Haitao Cui & Jagmohan S. Raju & Z. John Zhang, 2007. "Fairness and Channel Coordination," Management Science, INFORMS, vol. 53(8), pages 1303-1314, August.
    17. Krafft, Manfred & Goetz, Oliver & Mantrala, Murali & Sotgiu, Francesca & Tillmanns, Sebastian, 2015. "The Evolution of Marketing Channel Research Domains and Methodologies: An Integrative Review and Future Directions," Journal of Retailing, Elsevier, vol. 91(4), pages 569-585.
    18. Desheng Wu, 2011. "Joint pricing-servicing decision and channel strategies in the supply chain," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(1), pages 99-137, March.
    19. Ghosh, Debabrata & Shah, Janat, 2012. "A comparative analysis of greening policies across supply chain structures," International Journal of Production Economics, Elsevier, vol. 135(2), pages 568-583.
    20. Greg Shaffer & Florian Zettelmeyer, 2004. "Advertising in a Distribution Channel," Marketing Science, INFORMS, vol. 23(4), pages 619-628, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:navres:v:54:y:2007:i:2:p:162-175. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.