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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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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- Desquilbet, Marion & Hassan, Daniel & Monier-Dilhan, Sylvette, 2006. "Are Geographical Indications a Worthy Quality Signal? A Framework on Protected Designation of Origin with Endogenous Quality Choice," 2006 Annual meeting, July 23-26, Long Beach, CA 21466, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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- Lin Liu & Yuanzhu Lu, 2011. "Endogenous Timing in a Mixed Duopoly with Endogenous Vertical Differentiation," CEMA Working Papers 452, China Economics and Management Academy, Central University of Finance and Economics.
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- L. Lambertini & R. Orsini, 1998. "Existence of Equilibrium in A Differentiated Duopoly With Network Externalities," Working Papers 333, Dipartimento Scienze Economiche, Universita' di Bologna.
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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.
- S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
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