TY  - INPR
KW  - Competition
KW  -  capacity management
KW  -  collaboration
KW  -  game theory
KW  -  nash bargaining solution
TI  - Benefits of Collaboration on Capacity Investment and Allocation
UR  - https://doi.org/10.1177/10591478231224918
JF  - Production and Operations Management
AV  - public
ID  - discovery10187766
N1  - This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access page (https://us.sagepub.com/en-us/nam/open-access-at-sage).
SN  - 1059-1478
A1  - Ahn, Hyun-Soo
A1  - Çetinkaya, Eren
A1  - Duenyas, Izak
A1  - Zhang, Mengzhenyu
PB  - Production and Operations Management Society
Y1  - 2024/02/06/
N2  - This paper studies how capacity collaboration can benefit two competing firms. We consider a two-stage model where capacity decisions are made in the first stage when there are significant uncertainties about market conditions, and then production decisions are made in the second stage after most of these uncertainties are resolved. We vary the degree of collaboration between the two firms in their capacity and production decisions, examining multiple models and comparing the outcomes. We find that a firm can benefit from collaboration even with its competitors. Interestingly, the firms do not have to make production decisions jointly to realize the benefits of collaboration. Additionally, while collaborative capacity investment proves beneficial, collaborating on production with existing capacity can often yield greater benefits. We find that the advantages of collaboration are most pronounced when competition intensifies, demand fluctuates significantly, and investment costs are high.
ER  -