Entry and Innovation in Vertically Differentiated Markets PDF Download
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Author: Dirk Bergemann
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 58
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Book Description
Author: Dirk Bergemann
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 58
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Book Description
Author: Yannis Katsoulacos
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Dirk Bergemann
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper analyzes the entry of new products into vertically differentiated markets where an entrant and an incumbent compete in quantities. The value of the new product is initially uncertain and new information is generated through purchases in the market. We derive the (unique) Markov perfect equilibrium of the infinite horizon game under the strong long run average payoff criterion. The qualitative features of the optimal entry strategy are shown to depend exclusively on the relative ranking of established and new products based on current beliefs. Superior products are launched relatively slowly and at high initial prices whereas substitutes for existing products are launched aggressively at low initial prices. The robustness of these results with respect to different model specifications is discussed.
Author: Luca Lambertini
Publisher: Edward Elgar Publishing
ISBN: 9781781958315
Category : Business & Economics
Languages : en
Pages : 240
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Book Description
'This is a high-quality book on an important and central topic in the theory of industrial organisation. It is a cohesive and extremely well written volume which is destined to become a standard work on the subject.' - Mark Casson, University of Reading, UK This original new book offers a comprehensive and engaging perspective on the theory of vertical differentiation. It enables the reader to grasp the key concepts and effects that product quality has both on firms' behaviour and market structure, and the ways in which this relationship has evolved. With contributions from prominent figures in the field, the book investigates a number of important topics, such as the choice of the optimal product range, profit sharing, the existence of equilibrium in duopoly games, positional effects attached to status goods, international trade, collusion, advertising and the dynamics of capital accumulation for quality improvement and product innovation. Using both static and dynamic approaches, these aspects are assessed in relation to the manifold issues of regulation, competition policy and trade policy. Product differentiation and its influence on consumer behaviour and the performance of firms is a core topic in the existing literature in the fields of industrial organization, international trade and economic growth. This book will be an essential read for researchers, students and professional scholars working in these areas, especially those with an interest in antitrust regulation.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The incentives to innovate for the incumbent and the entrant in a vertically differentiated market are analised, in the absence of uncertainty. It turns out that if consumers marginal willingness to pay for quality is sufficiently low, the efficiency effect observationally works so as to favour innovation by the entrant, i.e., competition. Otherwise, it operates to the advantage of the incumbent who acquire the right to innovate, preempting thus the rival.
Author: Luigi Filippini
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study the licensing incentives of an independent input producer owning a patented product innovation which allows the downstream ጿirms to improve the quality of their ጿinal goods. We consider a general two-part tariff contract for both outside and incumbent innovators. We ጿind that technology diffusion critically depends on the nature of market competition (Cournot vs. Bertrand). Moreover, the vertical merger with either downstream ጿirm is always privately proijtable and it is welfare improving for large innovations: this implies that not all proijtable mergers should be rejected.
Author: Emanuele Bacchiega
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
Author: John Beath
Publisher: Cambridge University Press
ISBN: 9780521335522
Category : Business & Economics
Languages : en
Pages : 220
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Book Description
There are few industries in modern market economies that do not manufacture differentiated products. This book provides a systematic explanation and analysis of the widespread prevalence of this important category of products. The authors concentrate on models in which product selection is endogenous. In the first four chapters they consider models that try to predict the level of product differentiation that would emerge in situations of market equilibrium. These market equilibria with differentiated products are characterised and then compared with social welfare optima. Particular attention is paid to the distinction between horizontal and vertical differentiation as well as to the related issues of product quality and durability. This book brings together the most important theoretical contributions to these topics in a succinct and coherent manner. One of its major strengths is the way in which it carefully sets out the basic intuition behind the formal results. It will be useful to advanced undergraduate and graduate students taking courses in industrial economics and microeconomic theory.
Author: Raphael Auer
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 53
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Book Description
We develop a model of vertical innovation in which firms incur a market entry cost and position themselves in the quality space. Once established, firms compete monopolistically, selling to consumers with heterogeneous tastes for quality. We establish existence and uniqueness of the pricing game in such vertically differentiated markets with a potentially large number of active firms. Turning to firms' entry decisions, exogenously growing productivities induce firms to enter the market sequentially at the top end of the quality spectrum. We spell out the conditions under which the entry problem is replicated over time so that each new entrant improves incumbent qualities in fixed proportions. Sequential market entry overcomes the asymmetry of the location problem, which unavoidably arises in the quality spectrum because of its top and bottom ends. Our main technical contribution lies in handling this asymmetry, a feature absent in Salop (1979) and other circular representations of Hotelling (1929) and Lancaster (1966).
Author: Pia Weiss
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The paper examines the effects of the degree of competition on the firms' decision to innovate in differentiated markets. We find that a low (high) degree of product differentiation (competition) weakly supports the introduction of new products. Firms' weakly favour a process innovation if the degree of product differentiation (competition) is high (low). In addition, assumptions on the strategic complementarity of product and process innovations and on the decreasing returns of a product innovation are found to be the critical assumptions in the sense of Milgrom and Roberts (1994).
