A note on the low‐quality advantage in vertical product differentiation

Le Duc Niem

Managerial and Decision Economics, 2019, vol. 40, issue 2, 176-179

Abstract: In this paper, we modify the analysis of Schubert (2017), who found low‐quality advantage arising from vertical differentiation. Here, we relax the assumption of a sufficiently high reservation utility (so that consumers will always buy the good) to include the case in which they can refrain from buying the good. We find an explicit solution to profit functions, with the result that low‐quality advantage disappears.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:40:y:2019:i:2:p:176-179

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