We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product differentiation. Each firm can choose the levels of an arbitrary number of qualities. Consumers' valuations are drawn from independent and general distributions. The unit cost of production is...

In the third essay I show that the existence of homogeneous products in a market depends on choices made by firms. If search costs are small or the proportion of consumers who search costlessly (shoppers) is large, firms have incentives to differentiate themselves vertically. On the other hand,...

I analyze the implication of consumers' limited attention to quality differences on market outcomes and welfare. I model this limited attention to quality differences with a perception threshold: Consumers only perceive quality differences between goods that exceed the consumers' perception...