Perception and quality choice in vertically differentiated markets.

Consumers are assumed to be unable to discriminate between two goods of differing qualities provided that the qualities are close enough. It is shown that in a vertically differentiated duopoly this results in multiple equilibria. Demand for each firm's good is reduced. Firms' profits may be higher or lower depending on which equilibrium is selected.

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Year of publication:	2014-02-01
Authors:	Webb, Edward J.
Institutions:	Økonomisk Institut, Københavns Universitet
Subject:	Perception \| bounded rationality \| vertical differentiation \| oligopoly

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Extent:	application/pdf
Series:	Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 14-07 20 pages
Classification:	D03 - Behavioral Economics; Underlying Principles ; D43 - Oligopoly and Other Forms of Market Imperfection
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010764826