Endogenous vertical segmentation in a Cournot oligopoly
Paul Belleflamme () and
Valeria Forlin ()
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Valeria Forlin: European Commission
Journal of Economics, 2020, vol. 131, issue 2, No 4, 195 pages
Abstract An arbitrary number of (ex ante symmetric) firms first choose whether to produce a high-quality or a low-quality product and then, the quantity of product to put on the market. We establish the following results: (1) there exists competition within and across quality segments; (2) firms may be better off producing the low quality if competition within this segment is sufficiently low; (3) a firm’s switch across qualities may benefit all the other firms; (4) there exists a unique partition of the firms between the two quality segments; (5) if high quality has a larger cost-quality ratio, then the equilibrium exhibits vertical differentiation; (6) there may be too much differentiation from the consumers’ point of view.
Keywords: Quality; Differentiation; Oligopolistic competition (search for similar items in EconPapers)
JEL-codes: D43 L13 L25 (search for similar items in EconPapers)
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Working Paper: Endogenous vertical segmentation in a Cournot oligopoly (2020)
Working Paper: Endogenous vertical segmentation in a Cournot oligopoly (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:131:y:2020:i:2:d:10.1007_s00712-020-00706-8
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