- PhD in Economics, Duke University
- MA in Economics, Peking University
- BSc in Biology, University of Science & Technology of China
Dr. Wen Zhou is an Associate Professor in the group of Management and Strategy, HKU Business School. He received BS in biology from the University of Science and Technology of China, MA in economics from Peking University and PhD in economics from Duke University. He joined the University of Hong Kong in 2007 after working at the Hong Kong University of Science and Technology for several years.
Dr. Zhou teaches Managerial Economics for MBA, IMBA, and EMBA.
Dr. Zhou is an economist working in the field of industrial organization. His research focuses on endogenous market structure in the presence of mergers, innovation, and international trade. He has also studied business strategies such as pricing and advertising.
- “Proportional Fee vs. Unit Fee: Competition, Welfare, and Incentives”, with Dingwei Gu and Zhiyong Yao, Journal of Industrial Economics, forthcoming. https://doi.org/10.1111/joie.12279
- “Inflexible Repositioning: Commitment in Competition and Uncertainty”, with Jiajia Cong, Management Science, 2020, Vol. 66, No. 9, pp. 4207-4225. https://doi.org/10.1287/mnsc.2019.3383
- “Vertical Integration and Disruptive Cross-market R&D”, with Ping Lin and Tianle Zhang, Journal of Economics and Management Strategy, 2020, Vol. 29, No. 1, pp. 51-73. https://doi.org/10.1111/jems.12328
- “When is Upstream Collusion Profitable?”, with Dingwei Gu, Zhiyong Yao, and Rangrang Bai, RAND Journal of Economics, 2019, Vol. 50, No. 2, pp. 326-341. https://doi.org/10.1111/1756-2171.12271
- “Entry, Reputation and Intellectual Property Rights Enforcement”, with Jiahua Che and Larry Qiu, Canadian Journal of Economics, 2014, Vol. 47, No. 4, pp. 1256-1281. https://doi.org/10.1111/caje.12104
- “Multiproduct Firms and Scope Adjustment in Globalization”, with Larry Qiu, Journal of International Economics, 2013, Vol. 91, No. 1, pp. 142-153. https://doi.org/10.1016/j.jinteco.2013.04.006
- “The Effects of Competition on the R&D Portfolios of Multiproduct Firms”, with Ping Lin, International Journal of Industrial Organization, 2013, Vol. 31, No. 1, pp. 83-91. https://doi.org/10.1016/j.ijindorg.2012.11.003
- “Endogenous Horizontal Mergers under Cost Uncertainty”, International Journal of Industrial Organization, 2008, Vol. 26, No. 4, pp. 903-912. https://doi.org/10.1016/j.ijindorg.2006.10.010
- “Large is Beautiful: Horizontal Mergers for Better Exploitation of Production Shocks”, Journal of Industrial Economics, 2008, Vol. 56, No. 1, pp. 68-93. https://doi.org/10.1111/j.1467-6451.2008.00333.x
- “Merger Waves: A Model of Endogenous Mergers”, with Larry Qiu, RAND Journal of Economics, 2007, Vol. 38, No. 1, pp. 214-226. https://doi.org/10.1111/j.1756-2171.2007.tb00052.x
- “International Mergers: Incentives and Welfare”, with Larry Qiu, Journal of International Economics, 2006, Vol. 68, No. 1, pp. 38-58. https://doi.org/10.1016/j.jinteco.2004.12.005
- “The Choice of Commercial Breaks in Television Programs: The Number, Length, and Timing”, Journal of Industrial Economics, 2004, Vol. 52, No. 3, pp. 315-326. https://doi.org/10.1111/j.0022-1821.2004.00228.x
We study the value of commitment in a business environment that is both competitive and uncertain, in which two firms face stochastic demands and compete in positioning and repositioning. If the future demand tends to disperse or the demand uncertainty is sufficiently large, one firm chooses rigidity (i.e., commits not to change its positions), and the other chooses flexibility (i.e., to reposition freely). We find that a firm’s rigidity can benefit not only itself, but also its flexible rival. When uncertainty is larger, rigidity becomes more valuable relative to flexibility. These results arise because the asymmetric equilibrium generates two collective gains in addition to the usual individual gain (in terms of competitive advantages) accrued to the committing firm. A firm’s rigid repositioning can soften competition and generate a commitment value, and the other firm’s flexible repositioning generates an option value. Both values then spill over to competitors within the ecosystem. These results suggest that, when firms compete under uncertainty, commitment and options are valuable not only for the party that is making the choice, but also for all competing parties collectively. Commitment value and option value do not have to be mutually exclusive; they can coexist and even strengthen each other through unilateral commitment, which achieves the best of both strategies.
We study how vertical market structure affects the incentives of suppliers and customers to develop a new input that will enable the innovator to replace the incumbent supplier. In a vertical setting with an incumbent monopoly upstream supplier and two downstream firms, we show that vertical integration reduces the R&D incentives of the integrated parties, but increases that of the nonintegrated downstream rival. Strategic vertical integration may occur whereby the upstream incumbent integrates with a downstream firm to discourage or even preempt downstream disruptive R&D. Depending on the R&D costs, vertical integration may lower the social rate of innovation.
Motivated by the recent antitrust cases in which Japanese auto parts suppliers colluded to raise supply prices against their long‐term collaborators, the Japanese carmakers, we study the conditions under which an upstream collusion is profitable even after compensating downstream direct purchasers. Oligopoly competition in successive industries is shown to give rise to a vertical externality and a horizontal externality. If a collusive price of intermediate goods better balances the two externalities, the collusion will raise the joint profit of all firms in the two industries and is therefore profitable for the upstream after compensation of downstream firms.