Markets with technological progress: pricing, quality, and novelty

Ludwig von Auer and Mark Trede ()
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Ludwig von Auer: Universität Trier

Journal of Economics, 2018, vol. 124, issue 2, No 2, 137 pages

Abstract: Abstract New and old products differ in two respects: quality and newness. Whereas a higher quality of a new product always benefits consumers, the newness itself benefits some consumers, but not others, and for some, it is even a disadvantage. We capture these features in a Hotelling model of OverLapping Innovators (HOLI model), entailing a sequence of static Hotelling games of horizontal product differentiation (newness), that we extend by vertical product differentiation (quality). In this model, the firms compete on quality and price.

Keywords: Hotelling model; Vertical differentiation; Horizontal differentiation; Duopoly (search for similar items in EconPapers)
JEL-codes: C23 L11 L63 (search for similar items in EconPapers)
Date: 2018
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Related works:
Working Paper: Markets with Technological Progress: Pricing Quality, and Novelty (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:124:y:2018:i:2:d:10.1007_s00712-017-0569-x

DOI: 10.1007/s00712-017-0569-x

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