 Cannibalization within the Single Vertically Di¤erentiated DuopolyRyoma Kitamura () and Tetsuya Shinkai () No 124, Discussion Paper Series from School of Economics, Kwansei Gakuin University Abstract: We consider cannibalization in a duopoly model in which rms with di¤erent costs supply two vertically di¤erentiated products in the same market. We nd that an increase in the di¤erence in quality between the two goods or a decrease in the marginal cost of the high-quality goods leads to cannibalization. As a result, these goods keep low-quality goods from the market. Then, as the di¤erence in quality between the two goods increases from a su¢ ciently small to a su¢ ciently large level, we nd that 1) cannibalization from the low-quality good to the high- quality good of the e¢ cient rm expands, 2) cannibalization from the high-quality good to the low-quality good of the ine¢ cient rm shrinks. Further, we establish that 3) an increase in the production costs of the ine¢ cient rm improves social welfare when the di¤erence in quality between the two goods is su¢ ciently small. Keywords: Multi-product rm; Duopoly; Cannibalization; Vertical product di¤erentiation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:124 Access Statistics for this paper More papers in Discussion Paper Series from School of Economics, Kwansei Gakuin University Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.