Quality competition and entry deterrence: When to launch an extra brand

Stephan Müller () and Georg Götz

No 223, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: In this paper, we study the rational for an incumbent to launch a second brand when facing potential entry in a market with quality differentiated products and a fringe producer. Depending on market size, costs for a second brand and a potential entrant's setup cost the incumbent might use a second brand both when deterring and when accommodating entry. The analysis generates predictions about the equilibrium degree of product differentiation, the presence of a multiproduct incumbent, and the determinants of successful entry.

Keywords: multiproduct firms; quality competition; vertical product differentiation; entry accommodation; entry deterrence (search for similar items in EconPapers)
JEL-codes: D43 L13 M31 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-ipr, nep-pr~ and nep-mkt
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:223

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