Competition in Modular Clusters
by Jason WOODARD
| Speaker: |  |
Date: Time: Venue: |
19 October 2007 (Friday)
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Jason WOODARD |
We look forward to seeing you at this research seminar. |
Abstract
The last twenty years have witnessed the rise of disaggregated "clusters," "networks," or "ecosystems" of firms. In these clusters the activities of R&D, product design, production, logistics and selling may be split up among hundreds or even thousands of firms. Different firms will design and produce the different modules of a complex artifact -- like the processor, peripherals, and software of a computer system -- and different firms will specialize in different stages of a complex production process. In this talk I will discuss a paper written jointly with Carliss Baldwin that considers the pricing behavior and profitability of such clusters. In particular, we investigate a possibility hinted at in prior work: that pressures to raise prices across complementary-goods markets can offset pressures to reduce prices within oligopolistic differentiated-goods markets. In this paper, we isolate the offsetting price effects and show how they might operate in large as well as small clusters. We argue that it is possible in theory for a "modular cluster" of firms to mimic the pricing behavior and profitability of "one big firm." We relate our results to recent work on platform competition, two-sided markets, regional industry clusters, and business ecosystems.
Biography
Jason Woodard is an Assistant Professor at the SMU School of Information Systems. He studies the role of architectural strategy in the evolution of high-technology industries. His research interests took shape at IBM, where he was a technical evangelist for the company's Java, XML and Linux initiatives before joining the first cohort of a new joint doctoral program between Harvard Business School and the Division of Engineering and Applied Sciences at Harvard University, where he received his Ph.D. in 2006.