Beyond the Uniform Distribution: Equilibrium Prices and Qualities in a Vertically Differentiated Duopoly

Caterina Colombo (), Corrado Benassi and Alessandra Chirco ()

No 2015154, Working Papers from University of Ferrara, Department of Economics

Abstract: The paper proves the existence of a subgame perfect Nash equilibrium in a vertically differentiated duopoly with uncovered market, for a large set of symmetric and asymmetric distributions of consumers, including, among others, all logconcave distributions. The proof relies on the ’income share elasticity’ representation of the consumers’ density function, which ensures the analytical tractability of the firms’ optimality conditions at a high level of generality. Some illustrative examples of the solution are offered, in order to assess the impact of distributive shocks on the equilibrium market configuration.

Keywords: Vertical differentiation; duopoly; non-uniform distribution; subgame perfect equilibrium; income share elasticity (search for similar items in EconPapers)
JEL-codes: C72 D43 L11 L13 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-12-18
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (1)

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Working Paper: Beyond the Uniform Distribution: Equilibrium Prices and Qualities in a Vertically Differentiated Duopoly (2015)
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