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Article dans une revue The B.E. Journal of Theoretical Economics Année : 2006

Vertical Differentiation: Multiproduct Strategy to Face Entry?

Résumé

In this paper, we consider an incumbent firm facing potential entry in a vertical differentiation model a la Mussa and Rosen where consumers differ only by their intensity of preference for quality. We ask whether the incumbent firm has the incentive to adopt a multi-product strategy in order to face entry, in a natural duopoly case. It turns out that this strategy is never profitable and that an incumbent always prefers to produce one quality. It appears that either a cost effect or an income dispersion are necessary to urge producers to offer several products
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Dates et versions

hal-00310490, version 1 (10-08-2008)

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  • HAL Id : hal-00310490 , version 1

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Jean-Marc Bonnisseau, Rim Lahmandi-Ayed. Vertical Differentiation: Multiproduct Strategy to Face Entry?. The B.E. Journal of Theoretical Economics, 2006, 6 (1), pp.Article 15. ⟨hal-00310490⟩
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