Advanced Search
MyIDEAS: Login to save this paper or follow this series

Vertical Product Differentiation and Entry Deterrence

Contents:

Author Info

  • Lutz, Stefan

Abstract

This paper studies how the existence of a potential entrant influences an incumbent’s choice of quality in a model of vertical product differentiation and entry. Both firms face fixed set-up costs and quality-dependent costs of production, and compete on quality and price. With identical quality-dependent costs, the incumbent will always deter entry if possible, i.e. if fixed costs are high. Quality will be set at a level lower than the optimal quality set if entry was accommodated. If entry is not blockaded, quality will be set at a level strictly lower than the optimal quality set under monopoly.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cepr.org/pubs/dps/DP1455.asp
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1455.

as in new window
Length:
Date of creation: Aug 1996
Date of revision:
Handle: RePEc:cpr:ceprdp:1455

Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information:
Email:

Related research

Keywords: Entry; Oligopoly; Product Differentiation; Quality Standards;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Hung, N. M. & Schmitt, Nicolas, 1988. "Quality competition and threat of entry in duopoly," Economics Letters, Elsevier, vol. 27(3), pages 287-292.
  2. Palfrey, Thomas R, 1984. "Spatial Equilibrium with Entry," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 139-56, January.
  3. Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Universite de Montreal, Departement de sciences economiques.
  4. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "Price competition, quality and income disparities," CORE Discussion Papers RP -370, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Donnenfeld, Shabtai & Weber, Shlomo, 1992. "Vertical product differentiation with entry," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 449-472, September.
  6. Weber, S., 1989. "On Hierarchical Spatial Competition," Papers 89-04, York (Canada) - Department of Economics.
  7. Weber, Shlomo, 1992. "On Hierarchical Spatial Competition," Review of Economic Studies, Wiley Blackwell, vol. 59(2), pages 407-25, April.
  8. Choi, Chong Ju & Shin, Hyun Song, 1992. "A Comment on a Model of Vertical Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 229-31, June.
  9. Anglin, Paul M, 1992. "The Relationship between Models of Horizontal and Vertical Differentiation," Bulletin of Economic Research, Wiley Blackwell, vol. 44(1), pages 1-20, January.
  10. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  11. Lutz, Stefan, 1996. "Vertical Product Differentiation, Quality Standards, and International Trade Policy," CEPR Discussion Papers 1443, C.E.P.R. Discussion Papers.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Nilsson, Tomas K.H. & Foster, Kenneth A., 2005. "Certification of Pork Products," 2005 Annual meeting, July 24-27, Providence, RI 19350, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Boccard, N. & Wauthy, X.Y., 2010. "Equilibrium vertical differentiation in a Bertrand model with capacity precommitment," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 288-297, May.
  3. BOCCARD, Nicolas & WAUTHY, Xavier, 1999. "Relaxing Bertrand competition : capacity commitment beats quality differentiation," CORE Discussion Papers 1999056, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Nilsson, Tomas K.H. & Foster, Kenneth A., 2004. "Product And Process Certification In Imperfectly Competitive Markets," 2004 Annual meeting, August 1-4, Denver, CO 19933, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Acharyya, Rajat & Garcia-Alonso, Maria, 2009. "Parallel imports, drug innovation and international patent protection: a policy game," MPRA Paper 30159, University Library of Munich, Germany, revised 2010.
  6. Allard Made & Lambert Schoonbeek, 2009. "Entry Facilitation by Environmental Groups," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(4), pages 457-472, August.
  7. Yong-Hwan Noh & Giancarlo Moschini, 2006. "Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities," Review of Industrial Organization, Springer, vol. 29(3), pages 227-252, November.
  8. S Lutz, 2005. "Regulatory Standards Can Lead to Predation," The School of Economics Discussion Paper Series 0509, Economics, The University of Manchester.
  9. Usategui Díaz de Otalora, José María & Beloki, Lander, 2005. "Vertical Differentiation and Entry Deterrence: A Reconsideration," DFAEII Working Papers 2005-06, University of the Basque Country - Department of Foundations of Economic Analysis II.
  10. Rajat Acharyya & Maria D.C. Garcia-Alonso, 2009. "Weak IPR and Imitation in the South and International Exhaustion of Patent Rights in the North for Innovated Drugs: A Policy Game," Studies in Economics 0919, Department of Economics, University of Kent.
  11. Lutz, Stefan, 2003. "International Coordination of Quality Standards and Vertical Product Differentiation," ZEW Discussion Papers 03-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Beschorner, Patrick Frank Ernst, 2008. "Liberalization of the Postal Service Market in Europe: Entry with Universal Service and Partial Coverage," ZEW Discussion Papers 08-122, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1455. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.