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Consumer Targeting Under Quality Competition In A Liberalized Vertically Differentiated Market

  • Rajat Acharyya

    ()

    (Department of Economics, Jadavpur University)

This paper examines consumer targeting by cost-asymmetric home incumbent and foreign entrant under quality and price competition among them in a liberalized home-country market. With the home incumbent offering a price-quality menu before the foreign entrant offers his menu, the extent to which the home incumbent enjoys a home-market advantage over a technologically efficient foreign entrant determines the nature of market segmentation. When the home-market advantage is not too large, the home incumbent targets accommodates entry by targeting only the low-type home consumers. Gains from liberalization, however, depends to a large extent on the distribution of home consumers over different types.

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Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 30 (2005)
Issue (Month): 1 (June)
Pages: 129-150

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Handle: RePEc:jed:journl:v:30:y:2005:i:1:p:129-150
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  1. Acharyya, Rajat, 2005. "Quality discrimination among income constrained consumers," Economics Letters, Elsevier, vol. 86(2), pages 245-251, February.
  2. Thomas J. Prusa & Reiko Aoki, 1997. "Sequential vs. Simultaneous Choice With Endogenous Quality," Departmental Working Papers 199510, Rutgers University, Department of Economics.
  3. Rajat Acharyya & Prabal Roy Chowdhury, 2006. "Innovation incentives in an intergrated marketed with vertical product differentiation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 06-02, Indian Statistical Institute, New Delhi, India.
  4. Acharyya, Rajat, 1998. "Monopoly and product quality: Separating or pooling menu?," Economics Letters, Elsevier, vol. 61(2), pages 187-194, November.
  5. Donnenfeld, Shabtai & Weber, Shlomo, 1992. "Vertical product differentiation with entry," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 449-472, September.
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