Vertical Product Differentiation and Entry Deterrence PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Vertical Product Differentiation and Entry Deterrence PDF full book. Access full book title Vertical Product Differentiation and Entry Deterrence by Stefan Lutz. Download full books in PDF and EPUB format.
Author: Stefan Lutz
Publisher:
ISBN:
Category : Barriers to entry (Industrial organization)
Languages : en
Pages : 16
Get Book Here
Book Description
Author: Stefan Lutz
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
This paper studies how the existence of a potential entrant influences an incumbent's choice of quality in a model of vertical product differentiation and entry. Both firms face fixed set-up costs and quality-dependent costs of production and compete on quality and price. With identical quality-dependent costs, the incumbent will always deter entry if possible, i.e., if fixed costs are high. Quality will be set at a level lower than the optimal quality set if entry was accommodated. If entry is not blockaded, quality will be set at a level strictly lower than the optimal quality set under monopoly.
Author: Yong-Hwan Noh
Publisher:
ISBN:
Category : Market segmentation
Languages : en
Pages : 38
Get Book Here
Book Description
Author: Yong-Hwan Noh
Publisher:
ISBN:
Category :
Languages : en
Pages : 218
Get Book Here
Book Description
This dissertation explores models of heterogeneous product markets that rely on the "vertical product differentiation" formulation. The demand structure applied here is the covered-market configuration under the vertical product differentiation. With this specification, product market equilibria of the monopoly and duopoly market are derived. In particular, parameter restrictions on the degree of relative consumer heterogeneity associated with the covered-market setting are identified and used to interpret analytical results. Based on the specified demand structure, I revisit two industrial organization topics from the perspectives of vertical product differentiation. The first essay analyzes the entry of a new product into a vertically differentiated market where an entrant and an incumbent compete in prices. Many models on strategic entry deterrence deal with "limit quantities" as the established firm's strategic tool to deter or accommodate entry. Here, however, the entry-deterrence strategies of the incumbent firm rely on "limit qualities". With a sequential choice of quality, quality-dependent marginal production cost, and a fixed entry cost, I relate the entry-quality decision and the entry-deterrence strategies to the level of an entry cost and the degree of consumer heterogeneity. In particular, the incumbent influences the quality choice of the entrant by choosing its quality level before the entrant. This allows the incumbent to "limit" the entrant's entry decision and quality levels. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well as the incumbent's aggressive entry-deterrence strategies by increasing its quality level towards potential entry. Welfare evaluation confirms that social welfare is not necessarily improved when entry is encouraged rather than deterred. The second essay is motivated by some specific economic questions that have arisen with the introduction of 'genetically modified' (GM) agricultural products. A duopoly market-entry model associated with the vertical product differentiation is developed to show how the existence of segregation costs biases the firm's quality choice behavior. Thus, the key factor of the model is the cost of segregation activities that are necessary to distinguish GM products from non-GM products. With an increasing and convex cost of quality, the model predicts that the entrant firm has an increased incentive to enter the market with a low-quality good to reduce production costs if segregation costs are sufficiently high. When consumers are homogeneous enough, however, entry may occur with the high-quality good.
Author: Keuk Je Sung
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Stefan Lutz
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Jong-Say Yong
Publisher:
ISBN:
Category : Quality of products
Languages : en
Pages : 24
Get Book Here
Book Description
Author: Luca Lambertini
Publisher: Edward Elgar Publishing
ISBN: 9781781958315
Category : Business & Economics
Languages : en
Pages : 240
Get Book Here
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: Taehoon Youn
Publisher:
ISBN:
Category :
Languages : en
Pages : 256
Get Book Here
Book Description
Author: Dirk Bergemann
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
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: Stefan Lutz
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
