On production costs in vertical differentiation models

Dorothée Brécard

Working Papers from HAL

Abstract: In this paper, we analyse the effects of the introduction of a unit production cost beside a fixed cost of quality improvement in a duopoly model of vertical product differentiation. Thanks to an original methodology, we show that a low unit cost tends to reduce product differentiation and thus prices, whereas a high unit cost leads to widen product differentiation and to increase prices

Date: 2009
Note: View the original document on HAL open archive server: https://hal.science/hal-00421171
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Journal Article: On production costs in vertical differentiation models (2010)
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