The differentiation triangle

Marcel Canoy and Martin Peitz

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: The paper formalizes the observation that submarkets for high-quality and low-quality variants are markedly different from each other. We study a simple model where variants of low quality cannot be horizontally differentiated, whereas customers disagree about the value of variants in the high-quality range. We determine the outcome under price competition in the differentiation triangle with sequential entry when each firm can develop the vertical product line or decide to follow a niche strategy, i.e. to develop only one variant.

Keywords: Product differentiation; product design; multi-product competition; two-dimensional taste heterogeneity (search for similar items in EconPapers)
Pages: 32 pages
Date: 1997-04
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Citations: View citations in EconPapers (19)

Published by Ivie

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http://www.ivie.es/downloads/docs/wpasad/wpasad-1997-15.pdf Fisrt version / Primera version, 1997 (application/pdf)

Related works:
Journal Article: The Differentiation Triangle (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1997-15

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