Market Coverage and the Existence of Equilibrium in a Vertically Differentiated Duopoly

Ecchia, Giulio ; Lambertini, Luca (1998) Market Coverage and the Existence of Equilibrium in a Vertically Differentiated Duopoly. DOI 10.6092/unibo/amsacta/737.
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Abstract

The existence of a pure-strategy subgame perfect equilibrium in qualities and prices is investigated in a duopoly model of vertical differentiation where quality improvements require a quadratic variable cost. The alternative cases of partial and full market coverage are considered. It is shown that there exists a parameter range where the incentive to decrease differentiation arises for the high-quality firm, preventing firms to reach a pure-strategy duopoly equilibrium.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Ecchia, Giulio
Lambertini, Luca
Keywords
equilibrium existence vertical differentiation market coverage
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:02
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