Essays on Consumerization, Quality Differentiation, and Brand Proliferation

• Main Authors: Wang Ya-Chin, 王雅津
• Other Authors: Leonard Fong-Sheng Wang
• Format: Others
• Language: en_US
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/76149590481507282052

博士 === 國立中正大學 === 國際經濟研究所 === 93 === This thesis will distinguish between three main classes of differentiation that influence product characteristics horizontal, vertical, and brand differentiation. In each case, analysis proceeds in terms of market games and then multi-stage games. In chapter 2, a horizontal differentiation model to deal with consumerization and characteristic choice is developed. Ex-ante and ex-post consumer participation is delineated on a linear interval space model and allows for personalized interaction between consumers and a monopoly firm, in order to capture the spirit of consumerization by permitting the consumer’s participation in different stages of production and retailing. The main findings are: that the consumer uses ex-post participation to reduce preference deviation and utility loss, increase economic welfare from both the profit of firm and the utility surplus of consumer, but when the consumer uses ex-ante participation to remove preference deviation, utility surplus will rise and the it will rise if and only if the setting-up cost is not too high. The firm can also utilize price incentive to induce consumer’s arbitrage behavior. In chapter 3, a vertical differentiation model is used to describe international brand (INB) licensing. INB patentee pre-commits the franchise royalty to a quality level before the local firms compete in the domestic duopoly market and price competition occurs in the spatial framework. Three cases of licensing arrangements, low quality licensee, high quality licensee and joint quality licensee are considered. The results indicate that the imposition of a strategic franchise royalty has an important influence on the quality investment, thereby changing the market competition. Moreover, the patentee prefers to choose a low quality licensee for the purpose of decreasing the degree of production differentiation in a non-cooperative equilibrium. In the case of the low quality licensee, raising the INB awareness is the same as subsidizing the quality investment by strategic royalty. In the case of the high quality licensee, any action taken by the patentee to “upgrade” the INB awareness would not be a rational investment or market decision. In chapter 4, multinational enterprises (MNE) use transfer pricing as a strategic instrument to tackle the issues of brand proliferation with product differentiation in oligopoly competition. The headquarters’ prior action on setting transfer pricing is to backup the brand divisions in their output decision-making. With regard to the level of transfer pricing, this hinges upon the strength of intra-brand competition and inter-brand competition, which is expressed in opposite directions. It also shows that the optimal transfer pricing is affected by the tax difference(s) and product differentiation.