Uncertainty quality, product variety and price competition

Jean Gabszewicz and Joana Resende

No 2008027, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

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: 2008-08-01
New Economics Papers: this item is included in nep-com and nep-upt
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Working Paper: Uncertainty quality, product variety and price competition (2008)
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