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Marketing cooperation among rivals

Author: Gatignon, Hubert ; Robertson, T. S. ; Sahay, AINSEAD Area: Marketing Series: Working Paper ; 98/05/MKT Publisher: Fontainebleau : INSEAD, 1998.Language: EnglishDescription: 24 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: Why do competitors form alliances and other cooperative agreements instead of competing openly or engaging in tacit collusion? The rationale presented follows the logic from the economics literature for tacit collusion, although we depart from it and develop new theoretical viewpoints. We consider why the characteristics leading to tacit collusion are insufficient to explain formal cooperation among rivals and propose a set of factors which are necessary for formal cooperative agreements. In addition to these supply side explanations, we also propose that formal cooperation among rivals may generate benefits for consumers. The firm's expectations about consumer utility also explain the formation of formal cooperative agreements among rivals. Therefore we develop a relatively new area of research in marketing concerning the impact of horizontal cooperation on consumer utility
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Why do competitors form alliances and other cooperative agreements instead of competing openly or engaging in tacit collusion? The rationale presented follows the logic from the economics literature for tacit collusion, although we depart from it and develop new theoretical viewpoints. We consider why the characteristics leading to tacit collusion are insufficient to explain formal cooperation among rivals and propose a set of factors which are necessary for formal cooperative agreements. In addition to these supply side explanations, we also propose that formal cooperation among rivals may generate benefits for consumers. The firm's expectations about consumer utility also explain the formation of formal cooperative agreements among rivals. Therefore we develop a relatively new area of research in marketing concerning the impact of horizontal cooperation on consumer utility

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