Management Science and Financial Engineering

The Korean Operations Research and Management Science Society (한국경영과학회)
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Competition among Firms in Digital Convergence era

  • Received : 2008.03.15
  • Accepted : 2009.12.20
  • Published : 2010.09.30
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Abstract

Digital convergence which means the convergence of industry areas related to digital technologies is an important phenomenon in business, which will decide the fates of firms in the near future. The only firms which can create synergy effects from digital convergence are expected to be the winners in the fierce competition of digital convergence era. In our analysis, we examine the strategy of an integrated firm which has businesses in two different industry areas which are related to each other. By using a game theoretical model, we show how the integrated firm can win over two single separated firms which have business in only one industry area each by leveraging the two businesses the integrated firm has. In our welfare analysis, we also show that this convergence may be even beneficial to consumers, which seems counter-intuitive to social concerns about anti-competitive behaviors by integrated firms. Additionally, we study comparison between industry convergence and product convergence.

Keywords

References

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