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On production costs in vertical differentiation models

  • Brécard, Dorothée

We analyze the effects of the introduction of a unit production cost in a vertical differentiation model with fixed costs of quality improvement: For a low (high) unit cost, a rise in cost reduces (increases) product differentiation and prices.

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File URL: http://www.sciencedirect.com/science/article/B6V84-5133649-2/2/cfcaddc4f99d6611d8d49243d99e66b3
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 109 (2010)
Issue (Month): 3 (December)
Pages: 183-186

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Handle: RePEc:eee:ecolet:v:109:y:2010:i:3:p:183-186
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Pei-Cheng Liao, 2008. "A Note On Market Coverage In Vertical Differentiation Models With Fixed Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 60(1), pages 27-44, 01.
  2. Cremer, H. & Thisse, J.-F., . "Commodity taxation in a differentiated oligopoly," CORE Discussion Papers RP 1112, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Champsaur, Paul & Rochet, Jean-Charles, 1989. "Multiproduct Duopolists," Econometrica, Econometric Society, vol. 57(3), pages 533-57, May.
  4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  5. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  6. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, vol. 51(5), pages 1469-83, September.
  7. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 345-53, September.
  8. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
  9. Wang, X. Henry & Yang, Bill Z., 2001. "Mixed-strategy equilibria in a quality differentiation model," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 213-226, January.
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