EconPapers    
Economics at your fingertips  
 

Equilibrium vertical differentiation in a Bertrand model with capacity precommitment

Nicolas Boccard () and Xavier Wauthy

International Journal of Industrial Organization, 2010, vol. 28, issue 3, 288-297

Abstract: Both quality differentiation and capacity commitment have been shown to relax price competition. However, their joint influence on the outcome of price competition has not yet been assessed. In this article, we consider a three-stage game in which firms choose quality, then commit to capacity and, finally, compete in price. When the cost of quality is negligible, we show that firms do not differentiate their products in a subgame perfect equilibrium, in other words, capacity precommitment completely eliminates the incentive to differentiate by quality.

Keywords: Vertical; differentiation; Capacity; Bertrand; competition (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167-7187(09)00090-3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Equilibrium vertical differentiation in a Bertrand model with capacity precommitment (2010) Downloads
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:eee:indorg:v:28:y:2010:i:3:p:288-297

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-06-30
Handle: RePEc:eee:indorg:v:28:y:2010:i:3:p:288-297