Strategic Vertical Differentiation and Durable Goods Monopoly

Lisa N. Takeyama

Journal of Industrial Economics, 2002, vol. 50, issue 1, 43-56

Abstract: This paper considers a novel and strategic use of quality as a means for solving the durable‐goods time inconsistency problem. It demonstrates how durable‐goods producers can exploit the cannibalization of high‐quality markets by low‐quality goods. Relative to the static product line solution, this strategic dimension of quality choice implies higher quality levels of low‐end goods and the production of some low‐end products that would not otherwise be produced. In some cases, low‐end goods may rationally be sold below cost. The paper, therefore, offers a purely Coasian explanation for vertical product differentiation.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://doi.org/10.1111/1467-6451.00167

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jindec:v:50:y:2002:i:1:p:43-56

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-1821

Access Statistics for this article

Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

More articles in Journal of Industrial Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().