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Dynamic Duopoly with Vertical Differentiation

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  • L. Lambertini

Abstract

I analyse a differential game where firms, through capital accumulation over time, supply vertically differentiated goods. This proves that several results obtained by the static approach are not robust. I show that (i) the sustainability of the duopoly regime is conditional upon the level of firms R&D investments; (ii) there are quality ranges where the low quality firm invests more than the high quality firm; (ii) there are quality ranges where the low quality firm s profits are larger than the high quality firm s.

Suggested Citation

  • L. Lambertini, 2001. "Dynamic Duopoly with Vertical Differentiation," Working Papers 396, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:396
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