Abstract for: Reducing income volatility in multi-product companies through better resource sharing policies

This paper examines the effect of competition on internal resources on income volatility of multi-product companies. Therefore the two-shower model of Morecroft et al is tested and analyzed in symmetric and asymmetric situations. After discussing the opportunities and limits of the shower model’s translation into a company context, a stylized company model is presented and analyzed. As was expected, the stylized model preserves the shower model’s dynamic behaviour in principal. Optimization of the policy parameters, however, turns out to be sensitive to the objective function. Minimizing the gap of desired income and maximizing total cumulated income produces different outcomes, which is explained by an incomplete cost sector and can easily be avoided. Finally, by changing the equilibrium model into a growth model, it can be shown, that the amplitude of oscillations will increase, making it more difficult for decision makers to allocate internal resources in the most effective way.