Kazumichi, Iwasa and Toru, Kikuchi (2007): Cost Hetrogeneity and Strategic Divisionalization.
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In this note, we consider a simple duopoly environment in which two parent firms compete in a market. We assume that there are cost differentials between these two parent firms. The parent firms' choices of divisionalization are modeled as a two-stage game. It will be shown that the number of divisions of a parent firm with a cost advantage (i.e., lower marginal costs) is relatively large. The results imply that the cost advantage of one parent firm will be magnified through divisionalization decisions.
|Item Type:||MPRA Paper|
|Original Title:||Cost Hetrogeneity and Strategic Divisionalization|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms|
|Depositing User:||Toru Kikuchi|
|Date Deposited:||10. Nov 2007 03:33|
|Last Modified:||17. Feb 2013 17:44|