We consider a general equilibrium model with vertical preferences and a limited number of firms, where workers and consumers are differentiated respectively by their sensitivity to effort and their preference for quality. We compare the duopoly and the monopoly cases from the view point of each...

We study a simple model in which two vertically differentiated firms competein prices and mass advertising on an initially uninformedmarket. Consumers differ in their preference for quality. There is an upper bound on prices since consumers cannot spend more on the good than a fixed amount (say...