Title: Product Line Strategy in a Vertically Differentiated Duopoly
Abstract:We consider a duopoly model in which rms with di¤erent costs supply two vertically di¤erentiated products in the same market. We show that the e¢ cient rm produces more of the high-quality good and th...We consider a duopoly model in which rms with di¤erent costs supply two vertically di¤erentiated products in the same market. We show that the e¢ cient rm produces more of the high-quality good and the ine¢ cient one produces more of the low-quality good in equilibrium. We also nd that a change in the quality superiority of goods and relative cost e¢ ciency ratios leads to cannibalization from one good to the other and characterize graphically the product line strategies of rms through the two ratios.Read More
Publication Year: 2015
Publication Date: 2015-08-01
Language: en
Type: preprint
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