Cheng, Yi-Ling; Peng, Shin-Kun; Tabuchi, Takatoshi - Institute of Economics, Academia Sinica - 2010
The paper investigates a two-stage competition in a vertical di¤erentiated industry, where each
firm produces an rbitrary number of similar qualities and sells them to heterogeneous consumers. We show that, when unit costs of quality are increasing and quadratic, each
firm has an incentive...