Price competition with a stake in your rival

We examine how revenue-sharing and profit-sharing stakes affect price competition intensity under duopoly. Our analysis builds on the framework introduced by Varian (1980) accounts for fundamental asymmetries in terms of cost consumer loyalty. A stake exists when a firm appropriates share its rival’s revenues or profits. For example, marketplace owner that charges third-party seller an ad valorem fee sales has stake, holding minority ownership participation another stake. show always stronger competition-dampening effect (leads to higher prices) than explain introduction affects between firms. generates new insight into competitive interaction marketplace.