Product Line Strategy in a Vertically Di¤erentiated Duopoly

Ryoma Kitamura () and Tetsuya Shinkai ()

No 134, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We consider a duopoly model in which rms with di¤erent costs supply two vertically di¤erentiated products in the same market. We show that the e¢ cient rm produces more of the high-quality good and the ine¢ cient one produces more of the low-quality good in equilibrium. We also nd that a change in the quality superiority of goods and relative cost e¢ ciency ratios leads to cannibalization from one good to the other and characterize graphically the product line strategies of rms through the two ratios.

Keywords: Multi-product rm; Duopoly; Cannibalization; Vertical product di¤erentiation (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 L15 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2015-08, Revised 2015-08
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:134

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