Often a quality improvement necessitates modifications of varietal product features. This paper studies firms' incentives to invest in quality improving R&D when this decision affects the goods' degree of varietal differention.

Lancasterian models of product differentiation typically assume a one-dimension characteristics space. We show that standard results on prices and locations no longer hold when firms compete in a multi- characteistics space.

The design of distribution channels is an important marketing decision since a revision implies costly reorganization. Hence, it makes sense to study strategic motives of alternative distribution devices. A precommitment is a strategic move that affects the other players'expectations on how...