Entry and vertical differentiation

DOI10.1006/JETH.2001.2865MaRDI QIDQ1851230zbMATH OpenOpenAlexFDO

Authors Dirk Bergemann, Juuso Välimäki

Publication date 16 December 2002

Published in Journal of Economic Theory (Search for Journal in Brave)

Full work available at URL https://cowles.yale.edu/sites/default/files/files/pub/d12/d1277.pdf

zbMATH Keywords

Bayesian learningexperience goodsgame theoryMarkov perfect equilibriummathematical economicsquantity competitionvertical differentiation

Mathematics Subject Classification ID

Research exposition (monographs, survey articles) pertaining to game theory, economics, and finance (91-02) 2-person games (91A05) Noncooperative games (91A10) Applications of game theory (91A80) Auctions, bargaining, bidding and selling, and other market models (91B26)

Review text

The optimal entry strategies for different types of experience goods in a dynamic Cournot duopoly with vertically differentiated buyers is considered. The main goal of the article is to obtain a characterization of the features of the new product that lead to a qualitatively different entry strategy. It is shown that a new product that represents a certain improvement to an existing product is launched in the marked at prices above the static equilibrium level and sales quantities below the static level. As a model the unique Markov perfect equilibrium of the infinite horizon game under the strong long run average payoff criterion is used.

Recommendations

• Dynamic entry in vertically differentiated markets
• Vertical product differentiation and entry deterrence
• Optimal entry timing
• Experimentation in Markets
• Learning and Capacity Expansion under Demand Uncertainty

Cites work

• Controlling a Stochastic Process with Unknown Parameters
• Dynamic duopoly with learning through market experimentation
• Entry (and exit) in a differentiated industry
• Experimentation and learning in a differentiated-products duopoly
• scientific article; zbMATH DE number 4025105 (Why is no real title available?)
• scientific article; zbMATH DE number 4078444 (Why is no real title available?)
• scientific article; zbMATH DE number 3720745 (Why is no real title available?)
• scientific article; zbMATH DE number 3567644 (Why is no real title available?)
• Markov-Perfect Industry Dynamics: A Framework for Empirical Work
• Monopoly Experimentation
• Natural Oligopolies
• Optimal Learning by Experimentation
• Price and Quality in a New Product Monopoly
• Price competition, quality and income disparities
• Relaxing Price Competition Through Product Differentiation
• Strategic Experimentation
• The Ignorant Monopolist: Optimal Learning with Endogenous Information
• The Multi-Period Control Problem Under Uncertainty
• What do discounted optima converge to!: A theory of discount rate asymptotics in economic models

Cited in

(20)

• Differentiated industries without entry barriers
• Divisionalization and product differentiation
• Vertical product differentiation and entry deterrence
• Innovation timing games: a general framework with applications
• Undiscounted bandit games
• Dynamic pricing in the presence of individual learning
• Experience advantages and entry dynamics
• Vertical differentiation with overlapping ownership
• Product differentiation in a vertical structure
• Market entry strategy by vertically integrated firms: direct entry vs. spin-off
• Vertical differentiation, social networks and compatibility decisions
• scientific article; zbMATH DE number 4037547 (Why is no real title available?)
• A limit to price-increasing competition
• Timing of entry and location/product differentiation
• ENTRY AND IMPORT QUOTA
• Dynamic entry in vertically differentiated markets
• Remarks on good vs. bad characteristics in vertical differentiation
• Profit raising entry under mixed behavior
• Optimal entry timing
• Quality competition and threat of entry in duopoly

This page was built for publication: Entry and vertical differentiation

Report a bug (only for logged in users!)Click here to report a bug for this page (MaRDI item Q1851230)