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.
(In press).
Preview |
Text
Capacity_sharing___paper___FINAL-5.pdf - Accepted Version Download (1MB) | Preview |
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.
| Type: | Article |
|---|---|
| Title: | Benefits of Collaboration on Capacity Investment and Allocation |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1177/10591478231224918 |
| Publisher version: | https://doi.org/10.1177/10591478231224918 |
| Language: | English |
| Additional information: | 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). |
| Keywords: | Competition, capacity management, collaboration, game theory, nash bargaining solution |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10187766 |
Loading...
Loading...Loading...| 1. |  China | 42 |
| 2. |  United States | 12 |
| 3. |  Germany | 7 |
| 4. |  Hong Kong | 3 |
| 5. |  Canada | 3 |
| 6. |  United Kingdom | 2 |
| 7. |  South Africa | 2 |
| 8. |  France | 2 |
| 9. |  Honduras | 1 |
| 10. |  Australia | 1 |
Archive Staff Only
 |
View Item |
