Uncertainty quality, product variety and price competition

Jean Gabszewicz and Joana Resende

No 2008036, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper analyses price competition under product differentiation when goods are defined in a two dimensional characteristic space, and consumers do not know which firm sells which quality. Equilibrium prices consist of two additive terms, which balance consumers' relative valuation of goods' expected quality and consumers' preferences for variety. However the relative importance of these terms differ under vertical and horizontal dominance.

Keywords: product differentiation; variety; quality; uncertainty (search for similar items in EconPapers)
JEL-codes: D43 D80 L15 (search for similar items in EconPapers)
Date: 2008-06-01
New Economics Papers: this item is included in nep-com and nep-mic
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Working Paper: Uncertainty quality, product variety and price competition (2008)
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