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Vertical product differentiation and advertising.

Elliott, Caroline (2004) Vertical product differentiation and advertising. International Journal of the Economics of Business, 11 (1). pp. 37-53. ISSN 1466-1829

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    Abstract

    A duopoly model is developed in which firms’ strategic variables include brand quality, the number of distinct market segments to enter and price. Informative advertising is used to overcome consumer ignorance about brands. In contrast to many existing models in which firms engage in price competition, the subgame perfect equilibria of the game are not characterised by the production of vertically differentiated products. Further, whilst the firms typically produce identical high quality products, in some circumstances the production of homogeneous low quality brands can be an equilibrium strategy.

    Item Type: Article
    Journal or Publication Title: International Journal of the Economics of Business
    Additional Information: The final, definitive version of this article has been published in the Journal, International Journal of the Economics of Business, 11 (1), 2004, © Informa Plc
    Uncontrolled Keywords: Product Differentiation ; Advertising ; Duopoly ; JEL Classifications ; C7 ; D8 ; L1
    Subjects: H Social Sciences > HB Economic Theory
    Departments: Lancaster University Management School > Economics
    ID Code: 19876
    Deposited By: Dr Caroline Elliott
    Deposited On: 29 Apr 2009 14:43
    Refereed?: Yes
    Published?: Published
    Last Modified: 26 Jul 2012 15:35
    Identification Number:
    URI: http://eprints.lancs.ac.uk/id/eprint/19876

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