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Choosing Roles in a Duopoly for Endogenously Differentiated Products

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  • Lambertini, Luca

Abstract

The choice of the roles by firms in a vertically differentiated duopoly is analyzed introducing a preplay stage where firms set the timing of moves, under the alternative assumptions of full or non full market coverage. Under the first, it turns out that the unique subgame perfect equilibrium entails simultaneous play in the quality stage, followed by sequential play in the price stage, where both firms would prefer to be price leader, contrarily to the results obtained by previous literature. Under partial market coverage, it is possible to analyze both price and quantity competition. In such a case, simultaneous play in both stages emerges as the optimal behavior. Overall, contrarily to the conclusions reached by the previous literature, it is not possible to claim that the choice of the strategy space dominates the distribution of roles. Copyright 1996 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Suggested Citation

  • Lambertini, Luca, 1996. "Choosing Roles in a Duopoly for Endogenously Differentiated Products," Australian Economic Papers, Wiley Blackwell, vol. 35(67), pages 205-224, December.
  • Handle: RePEc:bla:ausecp:v:35:y:1996:i:67:p:205-24
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    Cited by:

    1. Yong-Hwan Noh & Giancarlo Moschini, 2006. "Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(3), pages 227-252, November.
    2. Li, Youping, 2014. "Price leadership in a vertically differentiated market," Economic Modelling, Elsevier, vol. 38(C), pages 67-70.
    3. Ludovic A. Julien & Olivier Musy, 2015. "A Review of Heinrich von Stackelberg's Book: ‘Market Structure and Equilibrium’," Australian Economic Papers, Wiley Blackwell, vol. 54(1), pages 52-60, March.
    4. Jochen Manegold, 2016. "Stackelberg Competition among Intermediaries in a Differentiated Duopoly with Product Innovation," Working Papers CIE 98, Paderborn University, CIE Center for International Economics.
    5. Luciano Fanti & Luca Gori, 2017. "A product innovation game with managerial delegation," Discussion Papers 2017/223, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    6. Luca Lambertini & Piero Tedeschi, 2007. "Would You Like To Enter First With A Low-Quality Good?," Bulletin of Economic Research, Wiley Blackwell, vol. 59(3), pages 269-282, July.
    7. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. L. Lambertini & R. Orsini, 1998. "Existence of Equilibrium in A Differentiated Duopoly With Network Externalities," Working Papers 333, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. repec:wsi:igtrxx:v:13:y:2011:i:02:n:s0219198911002952 is not listed on IDEAS
    10. Leufkens, Daniel, 2014. "Der Wert Geschützter Herkunftsangaben In Einer Industrieökonomischen Und Hedonischen Preisanalyse," 54th Annual Conference, Goettingen, Germany, September 17-19, 2014 187429, German Association of Agricultural Economists (GEWISOLA).
    11. Lin Liu & Yuanzhu Lu, 2014. "Endogenous Timing In A Mixed Duopoly With Endogenous Vertical Differentiation," Bulletin of Economic Research, Wiley Blackwell, vol. 66(3), pages 305-312, July.
    12. Emanuele Bacchiega & Luca Lambertini & Andrea Mantovaini, 2011. "Process And Product Innovation In A Vertically Differentiated Industry," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 209-221.
    13. Rahmati, Mohammad Hossein & Yousefi, Seyed Reza, 2013. "Demand estimation for the Iranian automobile industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(3), pages 277-284.
    14. Giulio ECCHIA & Luca LAMBERTINI, 2001. "Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly," Discussion Papers (REL - Recherches Economiques de Louvain) 2001021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Desquilbet, Marion & Hassan, Daniel & Monier-Dilhan, Sylvette, 2006. "Are Geographical Indications a Worthy Quality Signal? A Framework on Protected Designation of Origin with Endogenous Quality Choice," 2006 Annual meeting, July 23-26, Long Beach, CA 21466, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Amacher, Gregory & Koskela, Erkki & Ollikainen, Markku, 2003. "Quality Competition and Social Welfare in Markets with Partial Coverage: New Results," Discussion Papers 851, The Research Institute of the Finnish Economy.

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