Rivalry between strategic alliances

Anming Zhang; Yimin Zhang

doi:10.1016/j.ijindorg.2005.04.005

Rivalry between strategic alliances

Anming Zhang, Yimin Zhang

Department of Economics and Finance

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

62 Citations (Scopus)

Abstract

Rivalry between strategic alliances is investigated in a model where each alliance member maximizes its own profit and some share of its partner's profit. A complementary alliance confers a strategic advantage by allowing the partners to credibly commit to greater output, owing to both within-alliance complementarities and cross-alliance substitutabilities. Although rivalry between different alliances can sometimes lead to a Prisoners' Dilemma for firms, it tends to improve economic welfare. On the other hand, an alliance that arises due purely to the threat of entry may reduce welfare. © 2005 Elsevier B.V. All rights reserved.

Original language	English
Pages (from-to)	287-301
Journal	International Journal of Industrial Organization
Volume	24
Issue number	2
DOIs	https://doi.org/10.1016/j.ijindorg.2005.04.005
Publication status	Published - Mar 2006

Bibliographical note

Publication details (e.g. title, author(s), publication statuses and dates) are captured on an “AS IS” and “AS AVAILABLE” basis at the time of record harvesting from the data source. Suggestions for further amendments or supplementary information can be sent to [email protected].

Funding

We are very grateful to two anonymous referees and especially the editor (Simon Anderson) whose comments have led to a significant improvement. Earlier versions of this paper have been presented at University of British Columbia, University of Calgary, American Economic Association's Transportation and Public Utility Group Conference, Kobe University, and the 7th Air Transport Research Society Conference. We thank the seminar participants and Xuan Zhao for helpful comments. Financial support from the Social Science and Humanities Research Council of Canada (SSHRC) is gratefully acknowledged.

Research Keywords

Competing strategic alliances
International airline alliances
Partial alliance
Supermodularity

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AB - Rivalry between strategic alliances is investigated in a model where each alliance member maximizes its own profit and some share of its partner's profit. A complementary alliance confers a strategic advantage by allowing the partners to credibly commit to greater output, owing to both within-alliance complementarities and cross-alliance substitutabilities. Although rivalry between different alliances can sometimes lead to a Prisoners' Dilemma for firms, it tends to improve economic welfare. On the other hand, an alliance that arises due purely to the threat of entry may reduce welfare. © 2005 Elsevier B.V. All rights reserved.

KW - Competing strategic alliances

KW - International airline alliances

KW - Partial alliance

KW - Supermodularity

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Rivalry between strategic alliances

Abstract

Bibliographical note

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Research Keywords

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