The bright side of outside market entry with manufacturer encroachment
研究了当上游制造商可能入侵下游市场时，零售商邀请第三方进入的潜在好处，发现制造商可能因竞争策略而选择继续供货，零售商也可通过引入竞争避免被排挤。
This study discusses the possible benefits of inviting entrants for downstream retailers when facing the encroachment of their upstream manufacturers. We consider a model comprising one retailer, one manufacturer, and one potential entrant. The manufacturer decides whether to encroach or supply the retailer; The retailer decides whether to help a third-party firm overcome its entry barrier. We show that whether firms compete in quantity or price, the manufacturer, in the presence of an entrant, may choose to supply the retailer even if the retailer does not offer any advantages in terms of cost efficiency in retailing or channel differentiation. This is because, in such a scenario, the manufacturer treats the retailer as a strategic collaborator to either restrict the entrant’s market share or alleviate the downstream competition. In other words, triggering the intra-brand competition against the retailer may help the manufacturer perform better in the inter-brand competition against the entrant. On the other hand, the retailer may intentionally prompt entry to trigger inter-brand competition to avoid being foreclosed by the manufacturer and obtain a favorable procurement condition.