Sequential Entry in a Vertically Differentiated Duopoly

We analyse a model of vertical differentiation focusing on the trade-off between entering early and exploiting monopoly power with a low quality, versus waiting and enjoying a dominant market position with a superior product. We show that there exists a unique equilibrium where the leader enters with a lower quality than the follower, for low discount factors, for high costs of quality and for low consumers' willingness to pay for quality.

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Year of publication:	2003
Authors:	Lambertini, Luca ; Tedeschi, Piero
Publisher:	Bologna : Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)

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Series:	Quaderni - Working Paper DSE ; 492
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	10.6092/unibo/amsacta/4802 [DOI] hdl:10419/159333 [Handle] RePEc:bol:bodewp:492 [RePEc]
Source:	EconStor

Persistent link: https://www.econbiz.de/10011651386