Proliferation and Entry Deterrence in Vertically Differentiated Markets

Lu, Liang (2015) Proliferation and Entry Deterrence in Vertically Differentiated Markets.

Full text not available from this repository.

Abstract

We examine the profitability, entry deterrence and welfare effects of proliferation offered by non-cooperative firms competing in quality and price. In a market of one high quality firm and competitive low quality firms, we find that the established high quality firm will not initiate proliferation but may have an incentive to do so if facing entry threats. The proliferation quality is endogenously determined and the industry profit decreases with such proliferation. Moreover, we show that proliferation increases consumer surplus in the same way as entry does. That is, while proliferation to deter entry is anticompetitive, it is not necessarily welfare-reducing.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
Related URLs:
Depositing User: Pure Connector
Date Deposited: 29 Jun 2017 08:32
Last Modified: 23 Jun 2020 23:34
URI: https://ueaeprints.uea.ac.uk/id/eprint/63974
DOI:

Actions (login required)

View Item View Item