Product differentiation with multiple qualities

Francesca Barigozzi, Ching-to Albert Ma

We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product differentiation. Each firm 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 equilibrium effects of qualities on the rival's price in the general model. We present necessary and sufficient conditions for equilibrium differentiation in any of the qualities.

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Year of publication:	August 30, 2016
Authors:	Barigozzi, Francesca ; Ma, Ching-to Albert
Publisher:	Bologna, Italy : Alma Mater Studiorum - Università di Bologna, Department of Economics
Subject:	multidimensional product di¤erentiation \| quality and price competition \| Produktdifferenzierung \| Product differentiation \| Preiswettbewerb \| Price competition \| Produktqualität \| Product quality \| Theorie \| Theory \| Produktgestaltung \| Product design \| Oligopol \| Oligopoly \| Konsumentenverhalten \| Consumer behaviour

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