Title: The Economics of Cannibalization: A Duopoly in which Firms Supply Two Vertically Dierentiated Products
Abstract:School of Economics, , Kwansei Gakuin University1-155, Uegahara Ichiban-cho, Nishinomiya, Hyogo, 662-8501 JapanMarch 12, 2013AbstractIn this paper, we consider and propose a new duopoly model of canni...School of Economics, , Kwansei Gakuin University1-155, Uegahara Ichiban-cho, Nishinomiya, Hyogo, 662-8501 JapanMarch 12, 2013AbstractIn this paper, we consider and propose a new duopoly model of cannibalizationin which –rms produce and sell two vertically di⁄erentiated products in the samemarket. We show that each –rm produces the high-quality goods more (less) thanthe low-quality goods if the upper limit of taste of consumers is su¢ ciently high(notso high). We –nd that the increase in the di⁄erence in quality between two goodsor a decrease in marginal cost of the high-quality goods leads to cannibalization,such that the high-quality goods keep out the low-quality goods from the market.Furthermore, we conduct a welfare analysis.Keywords: Multiproduct –rm, Duopoly, CannibalizationJEL Classi–cation Numbers: D21, D43, L13, L15Read More
Publication Year: 2013
Publication Date: 2013-02-01
Language: en
Type: preprint
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Cited By Count: 5
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