CONSUMER TARGETING UNDER QUALITY COMPETITION IN A LIBERALIZED VERTICALLY DIFFERENTIATED MARKET

Rajat Acharyya

Journal of Economic Development, 2005, vol. 30, issue 1, 129-150

Abstract: This paper examines consumer targeting by cost-asymmetric home incumbent and foreign entrant under quality and price competition among them in a liberalized home-country market. With the home incumbent offering a price-quality menu before the foreign entrant offers his menu, the extent to which the home incumbent enjoys a home-market advantage over a technologically efficient foreign entrant determines the nature of market segmentation. When the home-market advantage is not too large, the home incumbent targets accommodates entry by targeting only the low-type home consumers. Gains from liberalization, however, depends to a large extent on the distribution of home consumers over different types.

Keywords: Consumer Targeting; Quality Competition; Liberalization; Accommodating Entry (search for similar items in EconPapers)
JEL-codes: D43 F12 L15 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:30:y:2005:i:1:p:129-150

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