Vertically Differentiated Duopoly with Uncertain Taste Distributions PDF Download
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Author: Sungmin Lim
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study a vertically differentiated duopoly with quadratic production costs where firms are uncertain about consumer taste distribution. We find two key results. First, when the quality difference is relatively greater (smaller) than the difference in the two firms' costs, uncertainty increases the market share of the high-quality (low-quality) product. Second, small degrees of uncertainty always increase social welfare.
Author: Sungmin Lim
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study a vertically differentiated duopoly with quadratic production costs where firms are uncertain about consumer taste distribution. We find two key results. First, when the quality difference is relatively greater (smaller) than the difference in the two firms' costs, uncertainty increases the market share of the high-quality (low-quality) product. Second, small degrees of uncertainty always increase social welfare.
Author: Corrado Benassi
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
The paper proves the existence of a subgame perfect Nash equilibrium in a vertically differentiated duopoly with uncovered market, for a large set of symmetric and asymmetric distributions of consumers, including, among others, all logconcave distributions. The proof relies on the 'income share elasticity' representation of the consumers' density function, which ensures the analytical tractability of the firms' optimality conditions at a high level of generality. Some illustrative examples of the solution are offered, in order to assess the impact of distributive shocks on the equilibrium market configuration.
Author:
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Category :
Languages : en
Pages :
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The existence of a pure-strategy subgame perfect equilibrium in qualities and prices is investigated in a duopoly model of vertical differentiation where quality improvements require a quadratic variable cost. The alternative cases of partial and full market coverage are considered. It is shown that there exists a parameter range where the incentive to decrease differentiation arises for the high-quality firm, preventing firms to reach a pure-strategy duopoly equilibrium.
Author: Alberto Cavaliere
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
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Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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We analyse a model of vertical differentiation focusing on the trade-off between entering early and exploiting monopoly power with a low quality, versus waiting and enjoying a dominant market position with a superior product. We show that there exists a unique equilibrium where the leader enters with a lower quality than the follower, for low discount factors, for high costs of quality and for low consumers willingness to pay for quality.
Author: Emanuele Bacchiega
Publisher:
ISBN:
Category :
Languages : en
Pages : 25
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Author: Michael Kuhn
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Category :
Languages : en
Pages : 28
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Author:
Publisher:
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Category :
Languages : en
Pages : 12
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Author: Piero Tedeschi
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ISBN:
Category :
Languages : en
Pages : 31
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Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The endogenous choice of timing is discussed in a vertically differentiated duopoly where quality improvement requires a fixed convex cost. The timing decision concerns the quality stage. Using an extended game with observable delay, it is shown that only simultaneous equilibria can arise. This puts into question the ability of Stackelberg games to describe the entry process.
