Grilo, Isabel (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE); Lille III, Gremars) Wauthy, Xavier (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))
Additional information is available for the following
registered author(s):
When consumers differ in their attitude towards risk, price competition between products of uncertain characteristics may be analyzed using address-models of product differentiation. These models provide a natural set-up for analyzing industries in which products of different reliability may coexist. This is in particular the case of second-hand markets. For such industries, we characterize the Nash equilibrium in prices and the associated market outcomes. They are shown to depend mainly on the distribution of risk aversion in the population. When the degree of reliability is chosen before price competition takes place, maximal differentiation results, yielding either horizontal or vertical differentiation configurations.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
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.: