IDEAS home Printed from https://ideas.repec.org/p/kgu/wpaper/89.html
   My bibliography  Save this paper

Quality Competition and a Demand Spillover Effect: A Case of Product Differentiated Duopoly

Author

Listed:
  • Tsuyoshi Toshimitsu

    (School of Economics, Kwansei Gakuin University)

Abstract

Employing the price-quality competition model in a horizontally differentiated products market, we analyze how a demand spillover effect associated with upgrading the quality level of a product affects the strategic relationship between firms and the property of a subgame perfect Nash equilibrium. In particular, we show that the strategic relationship depends on the degree of a demand spillover effect. Then, we consider the cases of second-best policy and cooperative quality choice. Furthermore, we illustrate that there exists a natural Stackelberg equilibrium under asymmetric demand spillover effects that is Pareto superior to other equilibria. Finally, we examine an optimal policy with international R&D rivalry.

Suggested Citation

  • Tsuyoshi Toshimitsu, 2012. "Quality Competition and a Demand Spillover Effect: A Case of Product Differentiated Duopoly," Discussion Paper Series 89, School of Economics, Kwansei Gakuin University, revised Jun 2012.
    • Handle: RePEc:kgu:wpaper:89
    as

    Download full text from publisher

    File URL: http://192.218.163.163/RePEc/pdf/kgdp89.pdf
    File Function: First version, 2012
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tsuyoshi Toshimitsu, 2014. "Strategic Product R&D Investment Policy under International Rivalry in the Presence of Demand Spillover Effects," International Economic Journal, Taylor & Francis Journals, vol. 28(2), pages 293-309, June.

    More about this item

    Keywords

    demand spillover effect; quality choice; product differentiation; Bertrand duopoly; a natural Stackelberg equilibrium; cooperative investment; optimal investment policy;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:89. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Toshihiro Okada (email available below). General contact details of provider: https://edirc.repec.org/data/dekgujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.