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How do strategic factor markets respond to rivalry in the product market?
Author(s) -
Chatain Olivier
Publication year - 2014
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2188
Subject(s) - rivalry , competition (biology) , resource (disambiguation) , factor market , industrial organization , business , product (mathematics) , value (mathematics) , product market , new product development , product proliferation , economics , microeconomics , commerce , marketing , product management , computer science , computer network , ecology , geometry , mathematics , machine learning , incentive , biology
This paper explores the interplay between product market, strategic factor market, and resource development. More competition in the product market makes resource buyers bid higher for resources, as the value of trying to preempt the resources is higher. Holding other initial conditions constant, resources are developed more in industries with factor markets than in industries without. When buyers of resources cannot integrate more than one resource, developers choose to develop either at a low or high level, generating a type of heterogeneity that would not arise otherwise. Changes in the intensity of competition in the product market can have the opposite effect on resource development efforts depending on the presence or absence of factor markets . Copyright © 2013 John Wiley & Sons, Ltd.