Multiproduct Duopoly with Vertical Di¤erentiation

Yi-Ling Cheng (), Shin-Kun Peng () and Takatoshi Tabuchi
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Yi-Ling Cheng: National Taiwan University

No 10-A004, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: The paper investigates a two-stage competition in a vertical di¤erentiated industry, where each firm produces an rbitrary number of similar qualities and sells them to heterogeneous consumers. We show that, when unit costs of quality are increasing and quadratic, each firm has an incentive to provide an interval of qualities. The finding is in sharp contrast to the single-quality outcome when the market coverage is exogenously determined. We also show that allowing for an interval of qualities intensi es competition, lowers the profi ts of each fi rm and raises the consumer surplus and the social welfare in comparison to the single-quality duopoly.

Keywords: multiproduct firms; market segmentation; quality competition; vertical product di¤erentiation. (search for similar items in EconPapers)
JEL-codes: D21 D43 L11 L13 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2010-04
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (1)

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https://www.econ.sinica.edu.tw/~econ/pdfPaper/10-A004.pdf (application/pdf)

Related works:
Journal Article: Multiproduct Duopoly with Vertical Differentiation (2011)
Working Paper: Multiproduct Duopoly with Vertical Differentiation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:sin:wpaper:10-a004

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