Cheng, Yi-Ling; Peng, Shin-Kun; Tabuchi, Takatoshi - Center for International Research on the Japanese … - 2010
The paper investigates a two-stage competition in a vertical differentiated industry, where each firm produces an arbitrary number of similar qualities and sells them to heterogeneous consumers. We show that, when unit costs of quality are increasing and quadratic, each firm has an incentive to...