We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product di¤erentiation. Each rm can choose the levels of an arbitrary number of qualities. Consumersvaluations are drawn from independent and general distributions. The unit cost of production is increasing and convex in qualities. We characterize equilibrium prices, and the e¤ects of qualities on the rivals equilibrium price in the general model. We present necessary and su¢ cient conditions for equilibrium di¤erentiation in any of the qualities.
Barigozzi, F., Ma, A. (2016). Product Differentiation with Multiple Qualities. Bologna : Dipartimento Scienze Economiche - Università di Bologna [doi.org/10.6092/unibo/amsacta/5407].
Product Differentiation with Multiple Qualities
BARIGOZZI, FRANCESCA;
2016
Abstract
We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product di¤erentiation. Each rm can choose the levels of an arbitrary number of qualities. Consumersvaluations are drawn from independent and general distributions. The unit cost of production is increasing and convex in qualities. We characterize equilibrium prices, and the e¤ects of qualities on the rivals equilibrium price in the general model. We present necessary and su¢ cient conditions for equilibrium di¤erentiation in any of the qualities.| File | Dimensione | Formato | |
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