The Provision of Information on a Market with Vertically Differentiated Goods

David Sevy
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David Sevy: Laboratoire d’Econométrie de l’Ecole Polytechnique, 1 rue Descartes, 75005 Paris, France

No 1993004, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This note incorporates vertical differentiation into a two-stage model constructed by Ireland(1992), in which duopolistic firms first choose a costless provision of information to provide and then compete in prices. Partial information stilI occurs at equilibrium, to ensure positive expected profits. For quality differential above a threshold value, there remains only one pure strategies Nash equilibrium with the best firm informing the whole market; quality raising harms consumers by depriving them of more surplus.

Date: 1993-02-01
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