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,...

Both quality differentiation and capacity commitment have been shown to relax price competition. However, their joint influence on the outcome of price competition has not yet been assessed. In this article, we consider a three stage game in which firms choose quality, then commit to capacity...