How Do the Relative Superiority of a High-quality Good and Cost Inefficiency between Firms Affect Product Lines in Multiproduct Firms?

Tetsuya Shinkai () and Ryoma Kitamura ()
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Ryoma Kitamura: Faculty of Economics, Otemon Gakuin University

No 230, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We consider the product line strategies of duopolistic firms, each of which can supply two vertically differentiated products under nonnegative output constraints and expectations of their rival's product line reaction. Considering a game of firms with heterogeneous (homogeneous) unit costs for high- (low-) quality products, we derive the equilibria of the game and explore the effects of the relative superiority of the high-quality product and relative cost efficiency on the equilibrium outcomes and illustrate the result using the production substitution of differentiated goods within a firm and the high-quality good between firms.

Keywords: Multiproduct firm; Product line; Vertical product differentiation (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 L15 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-10
New Economics Papers: this item is included in nep-bec, nep-ind, nep-mic and nep-ore
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