Exploring Stackelberg profit ordering under asymmetric product differentiation

Dyuti S. Banerjee and Ishita Chatterjee

Economic Modelling, 2014, vol. 36, issue C, 309-315

Abstract: The literature on differentiated products only considers symmetric cross-price effects and shows that the profit ordering of firms in a sequential set-up is uni-directional. This paper shows that uni-directional profit ordering breaks down under asymmetric product differentiation. Above a unique cross-price effect level the follower's profit exceeds that of the leader. The reverse is true below this level. This result holds for both substitutes and complements.

Keywords: Asymmetric product differentiation; Complements; Profit ordering; Substitutes (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:36:y:2014:i:c:p:309-315

DOI: 10.1016/j.econmod.2013.09.056

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