eprintid: 10187766
rev_number: 7
eprint_status: archive
userid: 699
dir: disk0/10/18/77/66
datestamp: 2024-02-27 16:58:24
lastmod: 2024-02-27 16:58:24
status_changed: 2024-02-27 16:58:24
type: article
metadata_visibility: show
sword_depositor: 699
creators_name: Ahn, Hyun-Soo
creators_name: Çetinkaya, Eren
creators_name: Duenyas, Izak
creators_name: Zhang, Mengzhenyu
title: Benefits of Collaboration on Capacity Investment and Allocation
ispublished: inpress
divisions: UCL
divisions: B04
divisions: C05
divisions: F49
keywords: Competition, capacity management, collaboration, game theory, nash bargaining solution
note: 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).
abstract: 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.
date: 2024-02-06
date_type: published
publisher: Production and Operations Management Society
official_url: https://doi.org/10.1177/10591478231224918
oa_status: green
full_text_type: pub
language: eng
primo: open
primo_central: open_green
verified: verified_manual
elements_id: 2251766
doi: 10.1177/10591478231224918
lyricists_name: Zhang, Mengzhenyu
lyricists_id: MZHAH52
actors_name: Zhang, Mengzhenyu
actors_id: MZHAH52
actors_role: owner
full_text_status: public
publication: Production and Operations Management
issn: 1059-1478
citation:        Ahn, Hyun-Soo;    Çetinkaya, Eren;    Duenyas, Izak;    Zhang, Mengzhenyu;      (2024)    Benefits of Collaboration on Capacity Investment and Allocation.                   Production and Operations Management        10.1177/10591478231224918 <https://doi.org/10.1177/10591478231224918>.    (In press).    Green open access   
 
document_url: https://discovery.ucl.ac.uk/id/eprint/10187766/1/Capacity_sharing___paper___FINAL-5.pdf