Sequential vs. Simultaneous Choice With Endogenous Quality
AbstractIn this paper we examine how the timing of investment affects the levels of quality chosen by firms. We show that in a model with vertical quality differentiation a game with sequential quality choice induces both firms to make smaller quality investments than they would in a game with simultaneous quality choice. Furthermore, we show that while aggregate profit is higher, both consumer and social surplus are lower under sequential quality choice.
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Bibliographic InfoPaper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 199510.
Date of creation: 09 Mar 1997
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quality choice; sequential and simultaneous quality choice; timing of R&D investment; vertical quality differentiation;
Find related papers by JEL classification:
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
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- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
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- Hodaka Morita & Xuan Nguyen, 2012. "FDI and Technology Spillovers under Vertical Product Di erentiation," Discussion Papers 2012-19, School of Economics, The University of New South Wales.
- Lambertini, Luca & Tampieri, Alessandro, 2012.
"Low-quality leadership in a vertically differentiated duopoly with Cournot competition,"
Elsevier, vol. 115(3), pages 396-398.
- L. Lambertini & A. Tampieri, 2011. "Low-Quality Leadership in a Vertically Differentiated Duopoly with Cournot Competition," Working Papers wp750, Dipartimento Scienze Economiche, Universita' di Bologna.
- Eugen Kovac & Kresimir Zigic, 2007. "International Competition in Vertically Differentiated Markets with Innovation and Imitation: Trade Policy versus Free Trade," CERGE-EI Working Papers wp336, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Rajat Acharyya, 2005. "Consumer Targeting Under Quality Competition In A Liberalized Vertically Differentiated Market," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 129-150, June.
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