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Guest talk by Professor Dr. Nagesh Gavirneni from Samuel Curtis Johnson Graduate School of Management on 23.10.2018

Professor Dr. Nagesh Gavirneni from Samuel Curtis Johnson Graduate School of Management at Cornell University, New York will give a talk on 23.10.2018. Please find below the title and abstract. Students, research assistants, and any others, who are interested, are warmly invited to attend.

 

23.10.2018 - 12:30, Room O 142: Co-opetition in Service Clusters with Waiting-Area Entertainment

Abstract

Unoccupied waiting feels longer than it actually is. Service providers operationalize this psychological principle by offering entertainment options in waiting areas. In a service cluster with a shared waiting space, firms have an opportunity to cooperate in the investment for providing entertainment options while competing on other service dimensions. In this paper, we develop a parsimonious model of co-opetition in a service cluster with shared entertainment options for waiting customers (e.g., a boardwalk). By comparing the case of co-opetition with two benchmarks (monopoly, and duopoly competition), we demonstrate that a service provider, which would otherwise be a local monopolist, can achieve a higher pro fit by joining a service cluster and engaging in co-opetition: we numerically show that the average firm profit under co-opetition is 7.65% higher than under monopoly. Achieving such benefits, however, requires a cost-allocation scheme properly addressing a fairness-efficiency tradeoff. A pursuit of fairness may backfire and lead to even lower profits than under pure competition. We show that as much as co-opetition facilitates resource sharing in a service cluster, it also heightens price competition. Furthermore, as the intensity of price competition increases, surprisingly, service providers may opt to charge higher service fees, albeit while providing a higher entertainment level.

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