Would you like to enter first with a low-quality good?
Using a two-period duopoly model with vertical differentiation, we show that there exists a unique subgame perfect equilibrium where the first entrant supplies a lower quality and gains higher profits than the second entrant. We also prove that this entry sequence is socially efficient.
|Date of creation:||May 2006|
|Contact details of provider:|| Postal: Via Bicocca degli Arcimboldi 8, 20126 Milano|
Web page: http://www.statistica.unimib.it
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- L. Lambertini, 1994.
"Choosing Roles in a Duopoly for Endogenously Differentiated Products,"
191, Dipartimento Scienze Economiche, Universita' di Bologna.
- Lambertini, Luca, 1996. "Choosing Roles in a Duopoly for Endogenously Differentiated Products," Australian Economic Papers, Wiley Blackwell, vol. 35(67), pages 205-224, December.
- Heidrun C. Hoppe & Ulrich Lehmann-Grube, 2001. "Second-Mover Advantages in Dynamic Quality Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(3), pages 419-433, 09.
- Lambertini, Luca, 1997. "Unicity of the equilibrium in the unconstrained Hotelling model," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 785-798, November.
- Ulrich Lehmann-Grube, 1997. "Strategic Choice of Quality When Quality is Costly: The Persistence of the High-Quality Advantage," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 372-384, Summer.
- Luca LAMBERTINI, 1997.
"The multiproduct monopolist under vertical differentiation : An inductive approach,"
Discussion Papers (REL - Recherches Economiques de Louvain)
1997021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- L. Lambertini, 1995. "The Multiproduct Monopolist Under Vertical Differentiation: an Inductive Approach," Working Papers 226, Dipartimento Scienze Economiche, Universita' di Bologna.
- Prajit K. Dutta & Saul Lach & Aldo Rustichini, 1993.
"Better Late Than Early: Vertical Differentiation in the Adoption of a New Technology,"
NBER Working Papers
4473, National Bureau of Economic Research, Inc.
- Dutta, Prajit K & Lach, Saul & Rustichini, Aldo, 1995. "Better Late Than Early: Vertical Differentiation in the Adoption of a New Technology," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(4), pages 563-589, Winter.
- Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- Aoki, Reiko & Prusa, Thomas J., 1997. "Sequential versus simultaneous choice with endogenous quality," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 103-121, February.
- GABSZEWICZ, Jean J. & THISSE, Jacques-François, "undated".
"Entry (and exit) in a differentiated industry,"
CORE Discussion Papers RP
400, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jaskold Gabszewicz, J. & Thisse, J. -F., 1979.
"Price competition, quality and income disparities,"
Journal of Economic Theory,
Elsevier, vol. 20(3), pages 340-359, June.
- Donnenfeld, Shabtai & Weber, Shlomo, 1992. "Vertical product differentiation with entry," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 449-472, September.
- CREMER, Helmuth & THISSE, Jacques-François, "undated".
"Location models of horizontal differentiation: a special case of vertical differentiation models,"
CORE Discussion Papers RP
931, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cremer, Helmuth & Thisse, Jacques-Francois, 1991. "Location Models of Horizontal Differentiation: A Special Case of Vertical Differentiation Models," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 383-390, June.
- A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
When requesting a correction, please mention this item's handle: RePEc:mis:wpaper:20060504. 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: (Matteo Pelagatti)
If references are entirely missing, you can add them using this form.