Product Differentiation and Price Competition between a Safe and a Risky Seller

Winand Emons

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: A safe and a risky seller serve a market. While the expensive safe seller can solve the problems of all consumers, the cheap risky seller can help a consumer only with a certain probability. The risky seller's success probabilities are distributed across consumers; by the choice of her quality the risky seller determines the shape of this distribution. If the risky seller fails, a consumer ends up with the safe seller, paying for the service twice. The risky seller chooses a quality-price pair inducing the safe seller to stick to his monopoly strategy. Some but not maximum differentiation results.

JEL-codes: D43 L13 L15 (search for similar items in EconPapers)
Date: 1998-10
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Product Differentiation and Price Competition Between a Safe and a Risky Seller (2000)
Working Paper: Product Differentiation and Price Competition Between a Safe and a Risky Seller (1998)
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