Quality competition and entry deterrence : when to launch an extra brand

Stephan Müller; Georg Götz

In this paper, we study the rational for an incumbent to launch a second brand when facing potential entry in a market with quality differentiated products and a fringe producer. Depending on market size, costs for a second brand and a potential entrant’s setup cost the incumbent might use a second brand both when deterring and when accommodating entry. The analysis generates predictions about the equilibrium degree of product differentiation, the presence of a multiproduct incumbent, and the determinants of successful entry.

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Year of publication:	2014
Authors:	Müller, Stephan ; Götz, Georg
Publisher:	Göttingen : CeGE
Subject:	multiproduct firms \| quality competition \| vertical product differentiation \| entry accommodation \| entry deterrence \| Markteintritt \| Market entry \| Produktdifferenzierung \| Product differentiation \| Theorie \| Theory \| Produktqualität \| Product quality \| Duopol \| Duopoly \| Mehrproduktfertigung \| Multiproduct production \| Produktgestaltung \| Product design