We consider a duopoly market with heterogenous consumers. The firms initially produce vertically differentiated standard products located at the end points of the variety interval. Customization provides ideal varieties for consumers but has no effect on quality. The firms first choose whether...

We analyze a duopoly game in which products are initially differentiated in variety and quality. Each consumer has a most preferred variety and a quality valuation. Customization provides ideal varieties but has no effect on product qualities. The firms first choose whether to customize their...

Hackner (2000, Journal of Economic Theory 93, 233-239) shows that in a differentiated oligopoly with more than two firms, prices may be higher under Bertrand competition than under Cournot competition, implying that the classical result of Singh and Vives (1984, Rand Journal of Economics, 15,...

The literature has established two kinds of entry bias in imperfectly competitive markets. First, free entry may lead to excessive entry relative to the socially optimal level. Second, free entry may lead to the wrong technology (type of firm) in the market compared to the socially optimal...

It is well established in vertical product differentiation models that the high-quality firm reaps a larger profit in a two-stage quality-price game as long as the cost of quality improvement is zero or is borne as fixed cost in the first stage quality choice. This note shows that the...

This paper finds that in a linear Stackelberg duopoly model, the follower is more likely to license a cost-reducing innovation to the leader than the leader is to the follower, regardless of whether licensing is in the form of a fixed fee or royalty per unit of output. Under fixed-fee licensing,...