Choosing Roles in a Duopoly for Endogenously Differentiated Products
AbstractThe choice of the roles by firms in a vertically differentiated duopoly is analyzed introducing a preplay stage where firms set the timing of moves, under the alternative assumptions of full or non full market coverage. Under the first, it turns out that the unique subgame perfect equilibrium entails simultaneous play in the quality stage, followed by sequential play in the price stage, where both firms would prefer to be price leader, contrarily to the results obtained by previous literature. Under partial market coverage, it is possible to analyze both price and quantity competition. In such a case, simultaneous play in both stages emerges as the optimal behavior. Overall, contrarily to the conclusions reached by the previous literature, it is not possible to claim that the choice of the strategy space dominates the distribution of roles. Copyright 1996 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 191.
Date of creation: Jan 1994
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Other versions of this item:
- Lambertini, Luca, 1996. "Choosing Roles in a Duopoly for Endogenously Differentiated Products," Australian Economic Papers, Wiley Blackwell, vol. 35(67), pages 205-24, December.
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- Amacher, Gregory & Koskela, Erkki & Ollikainen, Markku, 2003. "Quality Competition and Social Welfare in Markets with Partial Coverage: New Results," Discussion Papers 851, The Research Institute of the Finnish Economy.
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Bulletin of Economic Research,
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