Sequential Entry in a Vertically Differentiated Duopoly

Luca Lambertini () and Piero Tedeschi ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We analyse a model of vertical differentiation focusing on the trade-off between entering early and exploiting monopoly power with a low quality, versus waiting and enjoying a dominant market position with a superior product. We show that there exists a unique equilibrium where the leader enters with a lower quality than the follower, for low discount factors, for high costs of quality and for low consumers willingness to pay for quality.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:492

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