%0 Journal Article
%T The Bright Side of Having an Enemy
%A Baojun Jiang
%A Mushegh Harutyunyan
%J Journal of Marketing Research
%@ 1547-7193
%D 2019
%R 10.1177/0022243719827916
%X Conventional wisdom suggests that more intense competition will lower firms¡¯ profits. The authors show that this may not hold in a channel setting with exclusive retailers. They find that a manufacturer and its retailer can both become worse off if their competing manufacturer and retailer with quality-differentiated products exit the market. Put differently, in a channel setting, more intense competition can be all-win for the manufacturer, the retailer, and the consumers. Interestingly, a high-quality manufacturer can benefit from an increase in its competitor¡¯s perceived quality (e.g., due to favorable product reviews from consumers or third-party rating agencies). In other words, a manufacturer may prefer a strong rather than a weak enemy, and the manufacturer can have an incentive to help its competitor improve product quality or remain in the market. Furthermore, the authors show that a multiproduct monopolist manufacturer with an exclusive retailer may make higher profits by spinning off a product into a competing manufacturer that has its own retail channel, even without accounting for any proceeds from the spinoff
%K channel
%K competitive strategy
%K double marginalization
%K market entry
%K market exit
%K pricing
%U https://journals.sagepub.com/doi/full/10.1177/0022243719827916