Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104128
Authors: 
Reisinger, Markus
Year of Publication: 
2004
Series/Report no.: 
Munich Discussion Paper 2004-28
Abstract: 
This paper analyses a model of vertical product differentiation with one incumbent and one entrant firm. It is shown that if firms can produce only one quality level welfare in this entry game can be lower than in monopoly. This is the case if qualities are strategic complements because the incumbent may distort its quality downwards. If firms can produce a quality range and practice non-linear pricing welfare in case of entry deterrence is higher than in monopoly because the incumbent enlarges its product line. If entry is accommodated consumer rent increases but the consequences on welfare are ambiguous.
Subjects: 
Entry Deterrence
Price Discrimination
Vertical Differentiation
JEL: 
D43
L13
L65
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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