We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product differentiation. Each of two firms can choose the levels of an arbitrary number of qualities. Consumers' valuations are drawn from independent and general distributions. The unit cost of production is increasing and convex in qualities. We characterize equilibrium prices, and the effects of qualities on the rival's equilibrium price in the general model. Equilibrium qualities depend on what we call the Spence and price-reaction effects. For any equilibrium, we characterize conditions for quality differentiation.

Product differentiation with multiple qualities / F. Barigozzi; A. Ma. - In: INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION. - ISSN 0167-7187. - STAMPA. - 61:(2018), pp. 380-412. [10.1016/j.ijindorg.2018.10.002]

Product differentiation with multiple qualities

F. Barigozzi;
2018

Abstract

We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product differentiation. Each of two firms can choose the levels of an arbitrary number of qualities. Consumers' valuations are drawn from independent and general distributions. The unit cost of production is increasing and convex in qualities. We characterize equilibrium prices, and the effects of qualities on the rival's equilibrium price in the general model. Equilibrium qualities depend on what we call the Spence and price-reaction effects. For any equilibrium, we characterize conditions for quality differentiation.
2018
Product differentiation with multiple qualities / F. Barigozzi; A. Ma. - In: INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION. - ISSN 0167-7187. - STAMPA. - 61:(2018), pp. 380-412. [10.1016/j.ijindorg.2018.10.002]
F. Barigozzi; A. Ma
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/649374
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