Strategic alliances: Market structure, conduct and antitrust.
Date
2001
Authors
Sawler, James Harold.
Journal Title
Journal ISSN
Volume Title
Publisher
Dalhousie University
Abstract
Description
The past two decades have witnessed an unprecedented rise in alliance activity which is transforming the nature of markets. This study analyses the effect of strategic alliances on market structure and conduct, culminating in an examination of the antitrust treatment of competitor collaborations.
Given the widespread proliferation of alliances in many industries, any analysis of a market's structure must include an assessment of the nature of alliance formation. A framework for assessing this structure of cooperation is introduced which distinguishes between clustered alliance formation, where firms ally into competing constellations, and amorphous formation, where there are no such groupings or patterns. A model is developed which demonstrates that firms' propensity to cluster rises with the interdependence created by their alliances. Another model demonstrates that rising alliance-created interdependence reduces competitors' willingness to compete.
The recent proliferation of alliance activity can be partly attributed to firms' reaction to two opposing sets of environmental forces: one pushing firms to become larger, and another pushing them to remain small. Alliances enable firms to respond to these opposing forces by providing them with virtual bigness, the ability to achieve large firm advantages, while remaining small.
An examination of the impact of alliances on traditional elements of market structure, concentration and entry barriers, is conducted. This is facilitated by placing alliances into the framework of centripetal and centrifugal market forces developed by J. M. Blair. This is followed by a review of alliances' effect on innovation.
Two case studies illustrate how the study's findings relate to real markets. The automobile industry provides an opportunity to examine the effects of amorphous alliance formation, while the airline industry allows an examination of the effects of clustered formation.
The study concludes with an examination of how, given the study's findings, antitrust should treat alliances among competitors.
Thesis (Ph.D.)--Dalhousie University (Canada), 2001.
Given the widespread proliferation of alliances in many industries, any analysis of a market's structure must include an assessment of the nature of alliance formation. A framework for assessing this structure of cooperation is introduced which distinguishes between clustered alliance formation, where firms ally into competing constellations, and amorphous formation, where there are no such groupings or patterns. A model is developed which demonstrates that firms' propensity to cluster rises with the interdependence created by their alliances. Another model demonstrates that rising alliance-created interdependence reduces competitors' willingness to compete.
The recent proliferation of alliance activity can be partly attributed to firms' reaction to two opposing sets of environmental forces: one pushing firms to become larger, and another pushing them to remain small. Alliances enable firms to respond to these opposing forces by providing them with virtual bigness, the ability to achieve large firm advantages, while remaining small.
An examination of the impact of alliances on traditional elements of market structure, concentration and entry barriers, is conducted. This is facilitated by placing alliances into the framework of centripetal and centrifugal market forces developed by J. M. Blair. This is followed by a review of alliances' effect on innovation.
Two case studies illustrate how the study's findings relate to real markets. The automobile industry provides an opportunity to examine the effects of amorphous alliance formation, while the airline industry allows an examination of the effects of clustered formation.
The study concludes with an examination of how, given the study's findings, antitrust should treat alliances among competitors.
Thesis (Ph.D.)--Dalhousie University (Canada), 2001.
Keywords
Economics, General., Economics, Commerce-Business.