Lambertini, Luca ; Tedeschi, Piero
(2003)
Sequential Entry in a Vertically Differentiated Duopoly.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 31.
DOI 10.6092/unibo/amsacta/4802.
In: Quaderni - Working Paper DSE
(492).
ISSN 2282-6483.
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Abstract
We analyse a model of vertical differentiation focusing on the trade-off between entering early and exploiting monopoly power with a low quality, versus waiting and enjoying a dominant market position with a superior product. We show that there exists a unique equilibrium where the leader enters with a lower quality than the follower, for low discount factors, for high costs of quality and for low consumers’ willingness to pay for quality.
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