This paper considers an incumbent firm that is faced with a potential entrant in a vertically differentiated market. It demonstrates than an incumbent firm cannot prevent entry through product proliferation because of a commitment problem.

In this paper, we analyze a variety of data on saving motives, bequest motives, and bequest division from the "Comparative Survey of Savings in Japan and the United States", a binational survey conducted in 1996 by the Institute for Posts and Telecommunications Policy of the Ministry of Posts...