Product Differentiation with Multiple Qualities

Product Di¤erentiation with Multiple Qualities

We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product di¤erentiation. Each …rm can choose the levels of an arbitrary number of qualities. Consumers’valuations are drawn from independent and general distributions. The unit cost of production is increasing and convex in qualities. We characterize equilibrium prices, and the e¤ects of qualities on ...

Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities

We analyze the entry of a new product into a vertically differentiated market in which an entrant and an incumbent compete in prices. Here the entry-deterrence strategies of the incumbent firm rely on “limit qualities.” With a sequential choice of quality, a quality-dependent marginal production cost, and a fixed entry cost, we relate the entry-quality decision and the entry-deterrence strategi...

Product Differentiation and Dual Markets in Multiple Dimensions

A general model of product differentiation of the “address type” is developed in ndimensional Lancasterian product characteristics space. Conditions are specified for assuming non-overlapping spherical catchment areas or “niches” for generalist producers . This leaves market niches for smaller specialist producers, in a dual market structure. Drawing upon the literature on the so-called sphere ...

Multiple Discreteness and Product Differentiation: Demand for Carbonated Soft Drinks

F several of the largest supermarket product categories, such as carbonated soft drinks, canned soups, ready-to-eat cereals, and cookies, consumers regularly purchase assortments of products. Within the category, consumers often purchase multiple products and multiple units of each alternative selected on a given trip. This multiple discreteness violates the single-unit purchase assumption of m...

Product Differentiation