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Welfare-improving cooperation with a consumer-friendly multiproduct corporation

Arturo Garcia, Mariel Leal and Sang-Ho Lee ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper considers a multiproduct corporation that adopts consumer-friendly activities and cooperates with single plant firms for improving welfare. Comparing competition and (full or partial) cooperation, we show that full cooperation is socially beneficial if products are strong complements, whereas partial cooperation with a higher consumer-friendly activities is beneficial if products are substitutes. We also examine a sequential choice game of endogenous cooperation in which the multiproduct corporation can induce cooperation and show that our findings are supportive at equilibrium. We finally compare different ownerships of the single plant firms and find that foreign ownership decreases the benefits of cooperation. Therefore, a cooperation with multiproduct corporation should be accompanied with active governmental guideline for promoting consumer friendly activities.

Keywords: consumer-friendly activities; full cooperation; partial cooperation; multiproduct corporation; welfare-improving cooperation (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 L44 (search for similar items in EconPapers)
Date: 2020-01, Revised 2020-01
New Economics Papers: this item is included in nep-com and nep-env
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