Three essays on dynamic competition

I analyzed three dynamic competition models. In the first chapter, I consider how to design quality reporting systems (QRS) which imperfectly provide quality rating information to consumers. In a two-period repeated contest model, two firms try to get the relatively better rating since the better rating leads to a bigger market share. In a quality report, a firm's rating is determined by the expected quality of the firm's goods and a carried-over advantage from the firm's past rating. The size of the advantage score is the system designer's control variable and it determines how cumulative is the rating provided by the reporting system. I investigate the optimal rating accumulation rule which provides incentives for firms to choose the highest expected overall quality level in the market across periods.;In the second chapter, I show that inertia in consumer's perception of product quality can cause market segmentation with ex ante identical firms. A consumer may have inertia in his perception in the sense that he chooses the brand which was best in the preceding period unless his evaluation of some other firm's offering is better by a certain amount. I show that once a firm is perceived as a higher reputation brand, consumer inertia creates an incentive for the firm to provide high quality at a high price in subsequent periods while lower reputation firms offer low quality at a low price.;The third chapter analyzes open innovation projects and their effects on incentives for innovation. We model basic features of the General Public License (GPL), one of the most popular open source licenses and study how firms would behave under the license. By altering the timing of incentives, open innovation under GPL has a trade-off between stimulating innovation and promoting disclosure. By using open source, a firm can increase its technology level and therefore its probability of innovation success and of achieving a greater profit in that period. Under GPL, however, any innovative findings using open source would be also open source in subsequent periods. This obligation decreases the expected future revenue of the firm.