IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Will the high-quality producer please stand up?: A model of duopoly signaling

Listed author(s):
  • Mark N. Hertzendorf

    (Bureau of Economics, Federal Trade Commission, Washington D.C.)

  • Per Baltzer Overgaard

    (University of Aarhus)

We analyze how duopoly competition affects the incentives of firms to signal quality through prices. One firm has a high quality, the other a low, but initially potential customers are unable to verify who has the high quality. The incentives are such that the high quality firm prefers to reveal its identify, whereas the low quality firm prefers to hide. The scope for separation of the qualities is shown to be related to the size of the quality difference. If the difference is small, separation is mpossible, but if the difference is sufficiently large, the high quality firm can separate in equilbirum. We conclude that, whether there is pooling or separation, in a focal equilibrium the prices of both firms are likely distorted above their full information levels. Non-standard equilibrium refinements are proposed to deal with the added complexities of competitive duopoly signaling.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1998-04.

in new window

Length: 45 pages
Date of creation: Apr 1998
Handle: RePEc:kud:kuieci:1998-04
Contact details of provider: Postal:
Ă˜ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark

Phone: (0045) 35 32 30 54
Fax: +45 35 32 30 00
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kud:kuieci:1998-04. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.