Beyond the Uniform Distribution: Equilibrium Prices and Qualities in a Vertically Differentiated Duopoly

Benassi, Corrado ; Chirco, Alessandra ; Colombo, Caterina (2015) Beyond the Uniform Distribution: Equilibrium Prices and Qualities in a Vertically Differentiated Duopoly. Bologna: Dipartimento di Scienze economiche DSE, p. 30. DOI 10.6092/unibo/amsacta/4424. In: Quaderni - Working Paper DSE (1044). ISSN 2282-6483.
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Abstract

The paper proves the existence of a subgame perfect Nash equilibrium in a vertically differentiated duopoly with uncovered market, for a large set of symmetric and asymmetric distributions of consumers, including, among others, all logconcave distributions. The proof relies on the ’income share elasticity’ representation of the consumers’ density function, which ensures the analytical tractability of the firms’ optimality conditions at a high level of generality. Some illustrative examples of the solution are offered, in order to assess the impact of distributive shocks on the equilibrium market configuration.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Benassi, Corrado
Chirco, Alessandra
Colombo, Caterina
Keywords
Vertical differentiation, duopoly, non-uniform distribution, subgame perfect equilibrium, income share elasticity
Subjects
ISSN
2282-6483
DOI
Deposit date
22 Dec 2015 09:47
Last modified
22 Dec 2015 09:47
URI

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