Biform Games: Additional Online Material∗

(" Biform Games "). Appendix C uses the efficiency results (Propositions 5.1 and 5.2) in the main text to frame some of the ideas in the corporate-strategy literature. Appendix D contains further comments on the efficiency results. Corporate (multibusiness) strategy is the study of when 'the whole is worth more than the sum of the parts.' Alternatively put, corporate strategy is about the opportunities that arise because individual entities (divisions of a corporation, potential alliance partners, etc.) may each be maximizing the value they can capture, but appropriate joint action by the entities could capture more value in total. The literature usually distinguishes two kinds of corporate strategy. The " market power " route involves joint action that leads to capturing a greater slice of the existing pie. A good example is when different divisions (or businesses) engage in joint purchasing of an input, and thereby negotiate a lower unit cost. The " efficiency " route involves joint action that leads to creating a larger pie, and capturing at least a part of the increase. The focus of the literature is on the second kind of corporate strategy, and we follow that here. Our observation is that the efficiency results in the main text (Section 5) give us a way to classify different kinds of efficiency-oriented corporate strategies. Think of a corporate strategy as a way of addressing an inefficiency. Then, by the results in Section 5, we can then break this down into addressing a failure of Adding Up, or No Externalities, or No Coordination. (Of course, a given strategy could address more than one failure.) Here is a sketch of how this scheme works.