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Vertical differentiation with non-uniform consumers' distribution

Author

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  • Jean-Marc Bonnisseau
  • Rim Lahmandi-Ayed

Abstract

The note explores a vertical differentiation model with continuous non-uniform consumers' distribution. First some results concerning the finiteness property obtained with uniform consumers' distribution are generalized. Second we prove an existence result of price equilibrium when the distribution is concave. Finally we exhibit a counter-example to the existence of price equilibrium to show the importance of the concavity assumption on the distribution.
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Suggested Citation

  • Jean-Marc Bonnisseau & Rim Lahmandi-Ayed, 2007. "Vertical differentiation with non-uniform consumers' distribution," International Journal of Economic Theory, The International Society for Economic Theory, vol. 3(3), pages 179-190.
  • Handle: RePEc:bla:ijethy:v:3:y:2007:i:3:p:179-190
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1742-7363.2007.00054.x
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    References listed on IDEAS

    as
    1. Acharyya, Rajat, 1998. "Monopoly and product quality: Separating or pooling menu?," Economics Letters, Elsevier, vol. 61(2), pages 187-194, November.
    2. Lahmandi-Ayed, Rim, 2000. "Natural Oligopolies: A Vertical Differentiation Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 971-987, November.
    3. Kim, Joo-Han & Kim, Jae-Cheol, 1996. "Quality choice of multiproduct monopolist and spill-over effect," Economics Letters, Elsevier, vol. 52(3), pages 345-352, September.
    4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    5. Rim Lahmandi-Ayed, 2004. "Finiteness property in vertically differentiated markets: a note on locally increasing and decreasing returns," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(2), pages 371-382, January.
    6. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, vol. 51(5), pages 1469-1483, September.
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    Cited by:

    1. Encaoua David & Hollander Abraham, 2007. "First-Degree Discrimination by a Duopoly: Pricing and Quality Choice," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-21, May.
    2. C. Benassi & A. Chirco & C. Colombo, 2015. "Beyond the Uniform Distribution: Equilibrium Prices and Qualities in a Vertically Differentiated Duopoly," Working Papers wp1044, Dipartimento Scienze Economiche, Universita' di Bologna.

    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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