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Uncertainty quality, product variety and price competition

Author

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  • GABSZEWICZ, Jean J.

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • RESENDE, Joana

Abstract

This paper analyses price competition under product differentiation when goods are defined in a two dimensional characteristic space, and consumers do not know which firm sells which quality. Equilibrium prices consist of two additive terms, which balance consumers' relative valuation of goods' expected quality and consumers' preferences for variety. However the relative importance of these terms differ under vertical and horizontal dominance.

Suggested Citation

  • GABSZEWICZ, Jean J. & RESENDE, Joana, 2008. "Uncertainty quality, product variety and price competition," LIDAM Discussion Papers CORE 2008036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2008036
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    Keywords

    product differentiation; variety; quality; uncertainty;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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